Can any of the company-specific risk be diversified away by investing in both Asset World and AIRA Factoring 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 Asset World and AIRA Factoring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asset World Corp and AIRA Factoring Public, you can compare the effects of market volatilities on Asset World and AIRA Factoring 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 Asset World with a short position of AIRA Factoring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asset World and AIRA Factoring.
Diversification Opportunities for Asset World and AIRA Factoring
The 3 months correlation between Asset and AIRA is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Asset World Corp and AIRA Factoring Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIRA Factoring Public and Asset World 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 Asset World Corp are associated (or correlated) with AIRA Factoring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIRA Factoring Public has no effect on the direction of Asset World i.e., Asset World and AIRA Factoring go up and down completely randomly.
Pair Corralation between Asset World and AIRA Factoring
Assuming the 90 days trading horizon Asset World Corp is expected to under-perform the AIRA Factoring. But the stock apears to be less risky and, when comparing its historical volatility, Asset World Corp is 1.03 times less risky than AIRA Factoring. The stock trades about -0.39 of its potential returns per unit of risk. The AIRA Factoring Public is currently generating about -0.3 of returns per unit of risk over similar time horizon. If you would invest 71.00 in AIRA Factoring Public on March 6, 2024 and sell it today you would lose (7.00) from holding AIRA Factoring Public or give up 9.86% of portfolio value over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Asset World Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Asset World is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Over the last 90 days AIRA Factoring Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.