Correlation Between Air Asia and Pili International
Can any of the company-specific risk be diversified away by investing in both Air Asia and Pili International 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 Pili International 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 Pili International Multimedia, you can compare the effects of market volatilities on Air Asia and Pili International 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 Pili International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Asia and Pili International.
Diversification Opportunities for Air Asia and Pili International
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and Pili is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Air Asia Co and Pili International Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pili International 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 Pili International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pili International has no effect on the direction of Air Asia i.e., Air Asia and Pili International go up and down completely randomly.
Pair Corralation between Air Asia and Pili International
Assuming the 90 days trading horizon Air Asia Co is expected to under-perform the Pili International. In addition to that, Air Asia is 1.14 times more volatile than Pili International Multimedia. It trades about -0.17 of its total potential returns per unit of risk. Pili International Multimedia is currently generating about -0.16 per unit of volatility. If you would invest 2,500 in Pili International Multimedia on September 3, 2024 and sell it today you would lose (110.00) from holding Pili International Multimedia or give up 4.4% 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. Pili International Multimedia
Performance |
| Timeline |
| Air Asia |
| Pili International |
Air Asia and Pili International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Asia and Pili International
The main advantage of trading using opposite Air Asia and Pili International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Asia position performs unexpectedly, Pili International 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 Pili International will offset losses from the drop in Pili International'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 |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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