Correlation Between Asia Aviation and Airports
Can any of the company-specific risk be diversified away by investing in both Asia Aviation and Airports 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 Aviation and Airports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Aviation Public and Airports of Thailand, you can compare the effects of market volatilities on Asia Aviation and Airports 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 Aviation with a short position of Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Aviation and Airports.
Diversification Opportunities for Asia Aviation and Airports
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Asia and Airports is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Asia Aviation Public and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and Asia Aviation 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 Aviation Public are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of Asia Aviation i.e., Asia Aviation and Airports go up and down completely randomly.
Pair Corralation between Asia Aviation and Airports
Assuming the 90 days trading horizon Asia Aviation Public is expected to generate 40.31 times more return on investment than Airports. However, Asia Aviation is 40.31 times more volatile than Airports of Thailand. It trades about 0.04 of its potential returns per unit of risk. Airports of Thailand is currently generating about -0.04 per unit of risk. If you would invest 304.00 in Asia Aviation Public on November 2, 2024 and sell it today you would lose (78.00) from holding Asia Aviation Public or give up 25.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Aviation Public vs. Airports of Thailand
Performance |
| Timeline |
| Asia Aviation Public |
| Airports of Thailand |
Asia Aviation and Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Aviation and Airports
The main advantage of trading using opposite Asia Aviation and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Aviation position performs unexpectedly, Airports 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 Airports will offset losses from the drop in Airports' long position.| Asia Aviation vs. Airports of Thailand | Asia Aviation vs. Bangkok Expressway and | Asia Aviation vs. BTS Group Holdings | Asia Aviation vs. Bangkok Airways Public |
| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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