Correlation Between Aker Technology and Air Asia
Can any of the company-specific risk be diversified away by investing in both Aker Technology 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 Aker Technology and Air Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker Technology Co and Air Asia Co, you can compare the effects of market volatilities on Aker Technology 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 Aker Technology with a short position of Air Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Technology and Air Asia.
Diversification Opportunities for Aker Technology and Air Asia
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aker and Air is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aker Technology Co and Air Asia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Asia and Aker Technology 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 Aker Technology Co 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 Aker Technology i.e., Aker Technology and Air Asia go up and down completely randomly.
Pair Corralation between Aker Technology and Air Asia
Assuming the 90 days trading horizon Aker Technology is expected to generate 3.44 times less return on investment than Air Asia. But when comparing it to its historical volatility, Aker Technology Co is 1.48 times less risky than Air Asia. It trades about 0.03 of its potential returns per unit of risk. Air Asia Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,528 in Air Asia Co on September 3, 2024 and sell it today you would earn a total of 1,502 from holding Air Asia Co or generate 98.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker Technology Co vs. Air Asia Co
Performance |
| Timeline |
| Aker Technology |
| Air Asia |
Aker Technology and Air Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Technology and Air Asia
The main advantage of trading using opposite Aker Technology and Air Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Technology 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.| Aker Technology vs. Tang Eng Iron | Aker Technology vs. Yeou Yih Steel | Aker Technology vs. Arima Communications Corp | Aker Technology vs. Quintain Steel Co |
| Air Asia vs. Eva Airways Corp | Air Asia vs. Taiwan High Speed | Air Asia vs. China Airlines | Air Asia vs. Formosa Plastics Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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