Correlation Between Taita Chemical and Air Asia
Can any of the company-specific risk be diversified away by investing in both Taita Chemical and Air Asia 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 Taita Chemical and Air Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taita Chemical Co and Air Asia Co, you can compare the effects of market volatilities on Taita Chemical and Air Asia 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 Taita Chemical with a short position of Air Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taita Chemical and Air Asia.
Diversification Opportunities for Taita Chemical and Air Asia
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taita and Air is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Taita Chemical Co and Air Asia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Asia and Taita Chemical 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 Taita Chemical Co are associated (or correlated) with Air Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Asia has no effect on the direction of Taita Chemical i.e., Taita Chemical and Air Asia go up and down completely randomly.
Pair Corralation between Taita Chemical and Air Asia
Assuming the 90 days trading horizon Taita Chemical Co is expected to generate 0.79 times more return on investment than Air Asia. However, Taita Chemical Co is 1.26 times less risky than Air Asia. It trades about -0.02 of its potential returns per unit of risk. Air Asia Co is currently generating about -0.05 per unit of risk. If you would invest 1,964 in Taita Chemical Co on September 2, 2024 and sell it today you would lose (349.00) from holding Taita Chemical Co or give up 17.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Taita Chemical Co vs. Air Asia Co
Performance |
| Timeline |
| Taita Chemical |
| Air Asia |
Taita Chemical and Air Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taita Chemical and Air Asia
The main advantage of trading using opposite Taita Chemical and Air Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taita Chemical position performs unexpectedly, Air Asia 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 Air Asia will offset losses from the drop in Air Asia's long position.| Taita Chemical vs. China General Plastics | Taita Chemical vs. Asia Polymer Corp | Taita Chemical vs. USI Corp | Taita Chemical vs. Grand Pacific Petrochemical |
| Air Asia vs. Chung Hsin Electric Machinery | Air Asia vs. WINSON Machinery Co | Air Asia vs. Strong H Machinery | Air Asia vs. Silicon Power Computer |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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