Correlation Between Everlight Chemical and Air Asia
Can any of the company-specific risk be diversified away by investing in both Everlight 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 Everlight 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 Everlight Chemical Industrial and Air Asia Co, you can compare the effects of market volatilities on Everlight 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 Everlight Chemical with a short position of Air Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everlight Chemical and Air Asia.
Diversification Opportunities for Everlight Chemical and Air Asia
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Everlight and Air is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Everlight Chemical Industrial and Air Asia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Asia and Everlight 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 Everlight Chemical Industrial 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 Everlight Chemical i.e., Everlight Chemical and Air Asia go up and down completely randomly.
Pair Corralation between Everlight Chemical and Air Asia
Assuming the 90 days trading horizon Everlight Chemical is expected to generate 2.89 times less return on investment than Air Asia. But when comparing it to its historical volatility, Everlight Chemical Industrial is 1.5 times less risky than Air Asia. It trades about 0.03 of its potential returns per unit of risk. Air Asia Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,564 in Air Asia Co on August 30, 2024 and sell it today you would earn a total of 1,486 from holding Air Asia Co or generate 95.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everlight Chemical Industrial vs. Air Asia Co
Performance |
| Timeline |
| Everlight Chemical |
| Air Asia |
Everlight Chemical and Air Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everlight Chemical and Air Asia
The main advantage of trading using opposite Everlight Chemical and Air Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everlight 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.| Everlight Chemical vs. Oriental Union Chemical | Everlight Chemical vs. Ho Tung Chemical | Everlight Chemical vs. China Man Made Fiber | Everlight Chemical vs. Sunko Ink Co |
| Air Asia vs. Aerospace Industrial Development | Air Asia vs. CSBC Corp Taiwan | Air Asia vs. Chaheng Precision Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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