Correlation Between Air Asia and Taishin Financial
Can any of the company-specific risk be diversified away by investing in both Air Asia and Taishin Financial 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 Taishin Financial 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 Taishin Financial Holding, you can compare the effects of market volatilities on Air Asia and Taishin Financial 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 Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Asia and Taishin Financial.
Diversification Opportunities for Air Asia and Taishin Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Taishin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Air Asia Co and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding 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 Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Air Asia i.e., Air Asia and Taishin Financial go up and down completely randomly.
Pair Corralation between Air Asia and Taishin Financial
Assuming the 90 days trading horizon Air Asia Co is expected to generate 16.43 times more return on investment than Taishin Financial. However, Air Asia is 16.43 times more volatile than Taishin Financial Holding. It trades about 0.21 of its potential returns per unit of risk. Taishin Financial Holding is currently generating about 0.48 per unit of risk. If you would invest 3,245 in Air Asia Co on October 25, 2024 and sell it today you would earn a total of 560.00 from holding Air Asia Co or generate 17.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Asia Co vs. Taishin Financial Holding
Performance |
| Timeline |
| Air Asia |
| Taishin Financial Holding |
Air Asia and Taishin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Asia and Taishin Financial
The main advantage of trading using opposite Air Asia and Taishin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Asia position performs unexpectedly, Taishin Financial 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 Taishin Financial will offset losses from the drop in Taishin Financial's long position.| Air Asia vs. Kuo Yang Construction | Air Asia vs. Da Cin Construction Co | Air Asia vs. Chien Kuo Construction | Air Asia vs. Tex Ray Industrial Co |
| Taishin Financial vs. Feng Ching Metal | Taishin Financial vs. United Radiant Technology | Taishin Financial vs. Chicony Power Technology | Taishin Financial vs. Microelectronics Technology |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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