Correlation Between Vector and ASICS

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

By analyzing existing cross correlation between Vector Group and ASICS, you can compare the effects of market volatilities on Vector and ASICS 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 Vector with a short position of ASICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vector and ASICS.

Diversification Opportunities for Vector and ASICS

0.01

Correlation Coefficient

Vector  ASICS

Significant diversification

The 3 months correlation between Vector and ASICS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vector Group and ASICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASICS and Vector 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 Vector Group are associated (or correlated) with ASICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASICS has no effect on the direction of Vector i.e., Vector and ASICS go up and down completely randomly.

Pair Corralation between Vector and ASICS

Considering the 90-day investment horizon Vector Group is expected to under-perform the ASICS. But the stock apears to be less risky and, when comparing its historical volatility, Vector Group is 2.23 times less risky than ASICS. The stock trades about -0.07 of its potential returns per unit of risk. The ASICS is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,062  in ASICS on January 26, 2024 and sell it today you would earn a total of  538.00  from holding ASICS or generate 13.24% return on investment over 90 days.

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

Vector Group  vs.  ASICS

Vector Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vector Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Vector is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ASICS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASICS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, ASICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vector and ASICS

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

The idea behind Vector Group and ASICS 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.