Correlation Between Air Asia and U Media
Can any of the company-specific risk be diversified away by investing in both Air Asia and U Media 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 U Media 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 U Media Communications, you can compare the effects of market volatilities on Air Asia and U Media 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 U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Asia and U Media.
Diversification Opportunities for Air Asia and U Media
Significant diversification
The 3 months correlation between Air and 6470 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Air Asia Co and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications 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 U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of Air Asia i.e., Air Asia and U Media go up and down completely randomly.
Pair Corralation between Air Asia and U Media
Assuming the 90 days trading horizon Air Asia Co is expected to generate 2.25 times more return on investment than U Media. However, Air Asia is 2.25 times more volatile than U Media Communications. It trades about 0.21 of its potential returns per unit of risk. U Media Communications is currently generating about -0.22 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Asia Co vs. U Media Communications
Performance |
| Timeline |
| Air Asia |
| U Media Communications |
Air Asia and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Asia and U Media
The main advantage of trading using opposite Air Asia and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Asia position performs unexpectedly, U Media 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 U Media will offset losses from the drop in U Media'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 |
| U Media vs. Far EasTone Telecommunications | U Media vs. Tehmag Foods | U Media vs. Silicon Power Computer | U Media vs. Wei Chuan Foods |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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