Correlation Between Country Club and Aster DM

Can any of the company-specific risk be diversified away by investing in both Country Club and Aster DM 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 Country Club and Aster DM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Country Club Hospitality and Aster DM Healthcare, you can compare the effects of market volatilities on Country Club and Aster DM 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 Country Club with a short position of Aster DM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Club and Aster DM.

Diversification Opportunities for Country Club and Aster DM

0.16

Correlation Coefficient

Country Club  Aster DM

Average diversification

The 3 months correlation between Country and Aster is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Country Club Hospitality and Aster DM Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aster DM Healthcare and Country Club 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 Country Club Hospitality are associated (or correlated) with Aster DM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aster DM Healthcare has no effect on the direction of Country Club i.e., Country Club and Aster DM go up and down completely randomly.

Pair Corralation between Country Club and Aster DM

Assuming the 90 days trading horizon Country Club is expected to generate 2.42 times less return on investment than Aster DM. But when comparing it to its historical volatility, Country Club Hospitality is 1.1 times less risky than Aster DM. It trades about 0.11 of its potential returns per unit of risk. Aster DM Healthcare is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  43,035  in Aster DM Healthcare on September 17, 2024 and sell it today you would earn a total of  4,995  from holding Aster DM Healthcare or generate 11.61% return on investment over 90 days.

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

Country Club Hospitality  vs.  Aster DM Healthcare

Country Club Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Club Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Country Club is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Aster DM Healthcare

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Country Club and Aster DM

The main advantage of trading using opposite Country Club and Aster DM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Club position performs unexpectedly, Aster DM 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 Aster DM will offset losses from the drop in Aster DM's long position.

The idea behind Country Club Hospitality and Aster DM Healthcare 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.