Correlation Between AirAsia X and Petronas Gas
Can any of the company-specific risk be diversified away by investing in both AirAsia X and Petronas Gas 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 AirAsia X and Petronas Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AirAsia X Bhd and Petronas Gas Bhd, you can compare the effects of market volatilities on AirAsia X and Petronas Gas 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 AirAsia X with a short position of Petronas Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of AirAsia X and Petronas Gas.
Diversification Opportunities for AirAsia X and Petronas Gas
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AirAsia and Petronas is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AirAsia X Bhd and Petronas Gas Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Gas Bhd and AirAsia X 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 AirAsia X Bhd are associated (or correlated) with Petronas Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronas Gas Bhd has no effect on the direction of AirAsia X i.e., AirAsia X and Petronas Gas go up and down completely randomly.
Pair Corralation between AirAsia X and Petronas Gas
Assuming the 90 days trading horizon AirAsia X Bhd is expected to under-perform the Petronas Gas. In addition to that, AirAsia X is 3.26 times more volatile than Petronas Gas Bhd. It trades about -0.14 of its total potential returns per unit of risk. Petronas Gas Bhd is currently generating about -0.04 per unit of volatility. If you would invest 1,740 in Petronas Gas Bhd on October 22, 2024 and sell it today you would lose (22.00) from holding Petronas Gas Bhd or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AirAsia X Bhd vs. Petronas Gas Bhd
Performance |
| Timeline |
| AirAsia X Bhd |
| Petronas Gas Bhd |
AirAsia X and Petronas Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AirAsia X and Petronas Gas
The main advantage of trading using opposite AirAsia X and Petronas Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AirAsia X position performs unexpectedly, Petronas Gas 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 Petronas Gas will offset losses from the drop in Petronas Gas' long position.| AirAsia X vs. Eonmetall Group Bhd | AirAsia X vs. Awanbiru Technology Bhd | AirAsia X vs. Apollo Food Holdings | AirAsia X vs. Hong Leong Bank |
| Petronas Gas vs. Uchi Technologies Bhd | Petronas Gas vs. Aeon Credit Service | Petronas Gas vs. Kobay Tech Bhd | Petronas Gas vs. Malayan Banking Bhd |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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