Correlation Between Asefa Public and Union Auction

Can any of the company-specific risk be diversified away by investing in both Asefa Public and Union Auction at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Asefa Public and Union Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asefa Public and Union Auction Public, you can compare the effects of market volatilities on Asefa Public and Union Auction and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Asefa Public with a short position of Union Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asefa Public and Union Auction.

Diversification Opportunities for Asefa Public and Union Auction

-0.7

Correlation Coefficient

Asefa Public  Union Auction

Excellent diversification

The 3 months correlation between Asefa and Union is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Asefa Public and Union Auction Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Auction Public and Asefa Public is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Asefa Public are associated (or correlated) with Union Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Auction Public has no effect on the direction of Asefa Public i.e., Asefa Public and Union Auction go up and down completely randomly.

Pair Corralation between Asefa Public and Union Auction

Assuming the 90 days trading horizon Asefa Public is expected to generate 0.47 times more return on investment than Union Auction. However, Asefa Public is 2.13 times less risky than Union Auction. It trades about 0.17 of its potential returns per unit of risk. Union Auction Public is currently generating about -0.06 per unit of risk. If you would invest  304.00  in Asefa Public on April 24, 2025 and sell it today you would earn a total of  40.00  from holding Asefa Public or generate 13.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Asefa Public  vs.  Union Auction Public

Asefa Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asefa Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Asefa Public sustained solid returns over the last few months and may actually be approaching a breakup point.

Union Auction Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Union Auction Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Asefa Public and Union Auction

The main advantage of trading using opposite Asefa Public and Union Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asefa Public position performs unexpectedly, Union Auction can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Union Auction will offset losses from the drop in Union Auction's long position.

The idea behind Asefa Public and Union Auction Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.