Correlation Between Public Bank and AirAsia X
Can any of the company-specific risk be diversified away by investing in both Public Bank and AirAsia X 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 Public Bank and AirAsia X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Bank Bhd and AirAsia X Bhd, you can compare the effects of market volatilities on Public Bank and AirAsia X 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 Public Bank with a short position of AirAsia X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Bank and AirAsia X.
Diversification Opportunities for Public Bank and AirAsia X
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Public and AirAsia is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Public Bank Bhd and AirAsia X Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirAsia X Bhd and Public Bank 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 Public Bank Bhd are associated (or correlated) with AirAsia X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirAsia X Bhd has no effect on the direction of Public Bank i.e., Public Bank and AirAsia X go up and down completely randomly.
Pair Corralation between Public Bank and AirAsia X
Assuming the 90 days trading horizon Public Bank is expected to generate 10.79 times less return on investment than AirAsia X. But when comparing it to its historical volatility, Public Bank Bhd is 4.29 times less risky than AirAsia X. It trades about 0.04 of its potential returns per unit of risk. AirAsia X Bhd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 49.00 in AirAsia X Bhd on September 16, 2024 and sell it today you would earn a total of 140.00 from holding AirAsia X Bhd or generate 285.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Bank Bhd vs. AirAsia X Bhd
Performance |
| Timeline |
| Public Bank Bhd |
| AirAsia X Bhd |
Public Bank and AirAsia X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Bank and AirAsia X
The main advantage of trading using opposite Public Bank and AirAsia X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Bank position performs unexpectedly, AirAsia X 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 AirAsia X will offset losses from the drop in AirAsia X's long position.The idea behind Public Bank Bhd and AirAsia X Bhd 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.| AirAsia X vs. Public Packages Holdings | AirAsia X vs. Binasat Communications Bhd | AirAsia X vs. Awanbiru Technology Bhd | AirAsia X vs. Sports Toto Berhad |
Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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