Correlation Between Sino American and Air Asia
Can any of the company-specific risk be diversified away by investing in both Sino American and Air Asia 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 Sino American and Air Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino American Silicon Products and Air Asia Co, you can compare the effects of market volatilities on Sino American and Air Asia 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 Sino American with a short position of Air Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and Air Asia.
Diversification Opportunities for Sino American and Air Asia
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sino and Air is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Silicon Products and Air Asia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Asia and Sino American 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 Sino American Silicon Products are associated (or correlated) with Air Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Asia has no effect on the direction of Sino American i.e., Sino American and Air Asia go up and down completely randomly.
Pair Corralation between Sino American and Air Asia
Assuming the 90 days trading horizon Sino American Silicon Products is expected to generate 1.51 times more return on investment than Air Asia. However, Sino American is 1.51 times more volatile than Air Asia Co. It trades about -0.04 of its potential returns per unit of risk. Air Asia Co is currently generating about -0.33 per unit of risk. If you would invest 16,300 in Sino American Silicon Products on August 26, 2024 and sell it today you would lose (250.00) from holding Sino American Silicon Products or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sino American Silicon Products vs. Air Asia Co
Performance |
| Timeline |
| Sino American Silicon |
| Air Asia |
Sino American and Air Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino American and Air Asia
The main advantage of trading using opposite Sino American and Air Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino American position performs unexpectedly, Air Asia 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 Air Asia will offset losses from the drop in Air Asia's long position.| Sino American vs. Para Light Electronics | Sino American vs. ANJI Technology Co | Sino American vs. Aiptek International | Sino American vs. General Interface Solution |
| Air Asia vs. Chi Sheng Chemical | Air Asia vs. Forest Water Environmental | Air Asia vs. ECOVE Environment Corp | Air Asia vs. Jinan Acetate Chemical |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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