Correlation Between Air Asia and Realtek Semiconductor
Can any of the company-specific risk be diversified away by investing in both Air Asia and Realtek Semiconductor 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 Realtek Semiconductor 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 Realtek Semiconductor Corp, you can compare the effects of market volatilities on Air Asia and Realtek Semiconductor 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 Realtek Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Asia and Realtek Semiconductor.
Diversification Opportunities for Air Asia and Realtek Semiconductor
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Realtek is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Air Asia Co and Realtek Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realtek Semiconductor 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 Realtek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realtek Semiconductor has no effect on the direction of Air Asia i.e., Air Asia and Realtek Semiconductor go up and down completely randomly.
Pair Corralation between Air Asia and Realtek Semiconductor
Assuming the 90 days trading horizon Air Asia Co is expected to under-perform the Realtek Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Air Asia Co is 1.17 times less risky than Realtek Semiconductor. The stock trades about -0.07 of its potential returns per unit of risk. The Realtek Semiconductor Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 52,900 in Realtek Semiconductor Corp on December 4, 2024 and sell it today you would earn a total of 2,600 from holding Realtek Semiconductor Corp or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Asia Co vs. Realtek Semiconductor Corp
Performance |
| Timeline |
| Air Asia |
| Realtek Semiconductor |
Air Asia and Realtek Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Asia and Realtek Semiconductor
The main advantage of trading using opposite Air Asia and Realtek Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Asia position performs unexpectedly, Realtek Semiconductor 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 Realtek Semiconductor will offset losses from the drop in Realtek Semiconductor's long position.| Air Asia vs. Chiu Ting Machinery | Air Asia vs. New Asia Construction | Air Asia vs. Kedge Construction Co | Air Asia vs. ESUN Financial Holding |
| Realtek Semiconductor vs. Novatek Microelectronics Corp | Realtek Semiconductor vs. MediaTek | Realtek Semiconductor vs. VIA Technologies | Realtek Semiconductor vs. Quanta 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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