Correlation Between Air Asia and Aker Technology
Can any of the company-specific risk be diversified away by investing in both Air Asia and Aker Technology 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 Aker Technology 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 Aker Technology Co, you can compare the effects of market volatilities on Air Asia and Aker Technology 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 Aker Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Asia and Aker Technology.
Diversification Opportunities for Air Asia and Aker Technology
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Aker is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Air Asia Co and Aker Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Technology 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 Aker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Technology has no effect on the direction of Air Asia i.e., Air Asia and Aker Technology go up and down completely randomly.
Pair Corralation between Air Asia and Aker Technology
Assuming the 90 days trading horizon Air Asia Co is expected to under-perform the Aker Technology. But the stock apears to be less risky and, when comparing its historical volatility, Air Asia Co is 1.75 times less risky than Aker Technology. The stock trades about -0.12 of its potential returns per unit of risk. The Aker Technology Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,180 in Aker Technology Co on September 3, 2024 and sell it today you would earn a total of 560.00 from holding Aker Technology Co or generate 25.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Asia Co vs. Aker Technology Co
Performance |
| Timeline |
| Air Asia |
| Aker Technology |
Air Asia and Aker Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Asia and Aker Technology
The main advantage of trading using opposite Air Asia and Aker Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Asia position performs unexpectedly, Aker Technology 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 Aker Technology will offset losses from the drop in Aker Technology's long position.| Air Asia vs. Eva Airways Corp | Air Asia vs. Taiwan High Speed | Air Asia vs. China Airlines | Air Asia vs. Formosa Plastics Corp |
| Aker Technology vs. Tang Eng Iron | Aker Technology vs. Yeou Yih Steel | Aker Technology vs. Arima Communications Corp | Aker Technology vs. Quintain Steel Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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