Correlation Between Asia Metal and STARLUX Airlines
Can any of the company-specific risk be diversified away by investing in both Asia Metal and STARLUX Airlines 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 Asia Metal and STARLUX Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Metal Industries and STARLUX Airlines Co, you can compare the effects of market volatilities on Asia Metal and STARLUX Airlines 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 Asia Metal with a short position of STARLUX Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and STARLUX Airlines.
Diversification Opportunities for Asia Metal and STARLUX Airlines
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asia and STARLUX is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Industries and STARLUX Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STARLUX Airlines and Asia Metal 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 Asia Metal Industries are associated (or correlated) with STARLUX Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STARLUX Airlines has no effect on the direction of Asia Metal i.e., Asia Metal and STARLUX Airlines go up and down completely randomly.
Pair Corralation between Asia Metal and STARLUX Airlines
Assuming the 90 days trading horizon Asia Metal Industries is expected to generate 0.95 times more return on investment than STARLUX Airlines. However, Asia Metal Industries is 1.06 times less risky than STARLUX Airlines. It trades about 0.05 of its potential returns per unit of risk. STARLUX Airlines Co is currently generating about -0.02 per unit of risk. If you would invest 6,760 in Asia Metal Industries on August 31, 2024 and sell it today you would earn a total of 2,340 from holding Asia Metal Industries or generate 34.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Asia Metal Industries vs. STARLUX Airlines Co
Performance |
| Timeline |
| Asia Metal Industries |
| STARLUX Airlines |
Asia Metal and STARLUX Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Metal and STARLUX Airlines
The main advantage of trading using opposite Asia Metal and STARLUX Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Metal position performs unexpectedly, STARLUX Airlines 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 STARLUX Airlines will offset losses from the drop in STARLUX Airlines' long position.| Asia Metal vs. Golden Friends | Asia Metal vs. Sunonwealth Electric Machine | Asia Metal vs. Rechi Precision Co | Asia Metal vs. Fittech Co |
| STARLUX Airlines vs. Taiwan Semiconductor Manufacturing | STARLUX Airlines vs. Hon Hai Precision | STARLUX Airlines vs. MediaTek | STARLUX Airlines vs. Chunghwa Telecom Co |
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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