Correlation Between Air Asia and Provision Information
Can any of the company-specific risk be diversified away by investing in both Air Asia and Provision Information 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 Provision Information 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 Provision Information CoLtd, you can compare the effects of market volatilities on Air Asia and Provision Information 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 Provision Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Asia and Provision Information.
Diversification Opportunities for Air Asia and Provision Information
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Air and Provision is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Air Asia Co and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information 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 Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of Air Asia i.e., Air Asia and Provision Information go up and down completely randomly.
Pair Corralation between Air Asia and Provision Information
Assuming the 90 days trading horizon Air Asia Co is expected to generate 1.5 times more return on investment than Provision Information. However, Air Asia is 1.5 times more volatile than Provision Information CoLtd. It trades about 0.0 of its potential returns per unit of risk. Provision Information CoLtd is currently generating about -0.02 per unit of risk. If you would invest 3,463 in Air Asia Co on September 15, 2024 and sell it today you would lose (303.00) from holding Air Asia Co or give up 8.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Asia Co vs. Provision Information CoLtd
Performance |
| Timeline |
| Air Asia |
| Provision Information |
Air Asia and Provision Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Asia and Provision Information
The main advantage of trading using opposite Air Asia and Provision Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Asia position performs unexpectedly, Provision Information 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 Provision Information will offset losses from the drop in Provision Information's long position.| Air Asia vs. Aerospace Industrial Development | Air Asia vs. Ruentex Development Co | Air Asia vs. Symtek Automation Asia | Air Asia vs. CTCI Corp |
| Provision Information vs. Union Insurance Co | Provision Information vs. Air Asia Co | Provision Information vs. Fubon Financial Holding | Provision Information vs. Pontex Polyblend CoLtd |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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