Correlation Between Air Asia and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Air Asia and Chi Hua 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 Air Asia and Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Asia Co and Chi Hua Fitness, you can compare the effects of market volatilities on Air Asia and Chi Hua 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 Air Asia with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Asia and Chi Hua.
Diversification Opportunities for Air Asia and Chi Hua
Excellent diversification
The 3 months correlation between Air and Chi is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Air Asia Co and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness and Air Asia 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 Air Asia Co are associated (or correlated) with Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Air Asia i.e., Air Asia and Chi Hua go up and down completely randomly.
Pair Corralation between Air Asia and Chi Hua
Assuming the 90 days trading horizon Air Asia Co is expected to generate 3.57 times more return on investment than Chi Hua. However, Air Asia is 3.57 times more volatile than Chi Hua Fitness. It trades about 0.11 of its potential returns per unit of risk. Chi Hua Fitness is currently generating about -0.28 per unit of risk. If you would invest 3,580 in Air Asia Co on October 31, 2024 and sell it today you would earn a total of 225.00 from holding Air Asia Co or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Asia Co vs. Chi Hua Fitness
Performance |
| Timeline |
| Air Asia |
| Chi Hua Fitness |
Air Asia and Chi Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Asia and Chi Hua
The main advantage of trading using opposite Air Asia and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Asia position performs unexpectedly, Chi Hua 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 Chi Hua will offset losses from the drop in Chi Hua's long position.| Air Asia vs. CSBC Corp Taiwan | Air Asia vs. Tong Tai Machine Tool | Air Asia vs. Super Dragon Technology | Air Asia vs. Victory New Materials |
| Chi Hua vs. Cheng Mei Materials | Chi Hua vs. Great China Metal | Chi Hua vs. Wah Hong Industrial | Chi Hua vs. Advanced Echem Materials |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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