Correlation Between Air Asia and Simple Mart
Can any of the company-specific risk be diversified away by investing in both Air Asia and Simple Mart 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 Simple Mart 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 Simple Mart Retail, you can compare the effects of market volatilities on Air Asia and Simple Mart 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 Simple Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Asia and Simple Mart.
Diversification Opportunities for Air Asia and Simple Mart
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Simple is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Air Asia Co and Simple Mart Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simple Mart Retail 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 Simple Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simple Mart Retail has no effect on the direction of Air Asia i.e., Air Asia and Simple Mart go up and down completely randomly.
Pair Corralation between Air Asia and Simple Mart
Assuming the 90 days trading horizon Air Asia Co is expected to generate 5.02 times more return on investment than Simple Mart. However, Air Asia is 5.02 times more volatile than Simple Mart Retail. It trades about 0.1 of its potential returns per unit of risk. Simple Mart Retail is currently generating about -0.37 per unit of risk. If you would invest 3,300 in Air Asia Co on October 12, 2024 and sell it today you would earn a total of 220.00 from holding Air Asia Co or generate 6.67% 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. Simple Mart Retail
Performance |
| Timeline |
| Air Asia |
| Simple Mart Retail |
Air Asia and Simple Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Asia and Simple Mart
The main advantage of trading using opposite Air Asia and Simple Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Asia position performs unexpectedly, Simple Mart 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 Simple Mart will offset losses from the drop in Simple Mart's long position.| Air Asia vs. Oceanic Beverages Co | Air Asia vs. Mercuries Life Insurance | Air Asia vs. Dadi Early Childhood Education | Air Asia vs. Union Insurance Co |
| Simple Mart vs. Newretail Co | Simple Mart vs. Air Asia Co | Simple Mart vs. Wonderful Hi Tech Co | Simple Mart vs. Far EasTone Telecommunications |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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