Correlation Between China Airlines and Air Asia
Can any of the company-specific risk be diversified away by investing in both China Airlines 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 China Airlines and Air Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Airlines and Air Asia Co, you can compare the effects of market volatilities on China Airlines 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 China Airlines with a short position of Air Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Airlines and Air Asia.
Diversification Opportunities for China Airlines and Air Asia
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Air is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Airlines and Air Asia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Asia and China Airlines 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 China Airlines 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 China Airlines i.e., China Airlines and Air Asia go up and down completely randomly.
Pair Corralation between China Airlines and Air Asia
Assuming the 90 days trading horizon China Airlines is expected to generate 0.73 times more return on investment than Air Asia. However, China Airlines is 1.36 times less risky than Air Asia. It trades about 0.04 of its potential returns per unit of risk. Air Asia Co is currently generating about 0.0 per unit of risk. If you would invest 2,170 in China Airlines on September 4, 2024 and sell it today you would earn a total of 345.00 from holding China Airlines or generate 15.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Airlines vs. Air Asia Co
Performance |
| Timeline |
| China Airlines |
| Air Asia |
China Airlines and Air Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Airlines and Air Asia
The main advantage of trading using opposite China Airlines and Air Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Airlines 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.| China Airlines vs. Universal Microelectronics Co | China Airlines vs. AVerMedia Technologies | China Airlines vs. Symtek Automation Asia | China Airlines vs. WiseChip Semiconductor |
| Air Asia vs. Eva Airways Corp | Air Asia vs. Taiwan High Speed | Air Asia vs. China Airlines | Air Asia vs. Formosa Plastics Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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