Correlation Between Asia Aviation and Beauty Community
Can any of the company-specific risk be diversified away by investing in both Asia Aviation and Beauty Community 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 Beauty Community 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 Beauty Community Public, you can compare the effects of market volatilities on Asia Aviation and Beauty Community 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 Beauty Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Aviation and Beauty Community.
Diversification Opportunities for Asia Aviation and Beauty Community
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asia and Beauty is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Asia Aviation Public and Beauty Community Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Community Public 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 Beauty Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Community Public has no effect on the direction of Asia Aviation i.e., Asia Aviation and Beauty Community go up and down completely randomly.
Pair Corralation between Asia Aviation and Beauty Community
Assuming the 90 days trading horizon Asia Aviation Public is expected to generate 0.74 times more return on investment than Beauty Community. However, Asia Aviation Public is 1.36 times less risky than Beauty Community. It trades about -0.09 of its potential returns per unit of risk. Beauty Community Public is currently generating about -0.45 per unit of risk. If you would invest 290.00 in Asia Aviation Public on August 29, 2024 and sell it today you would lose (10.00) from holding Asia Aviation Public or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Aviation Public vs. Beauty Community Public
Performance |
| Timeline |
| Asia Aviation Public |
| Beauty Community Public |
Asia Aviation and Beauty Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Aviation and Beauty Community
The main advantage of trading using opposite Asia Aviation and Beauty Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Aviation position performs unexpectedly, Beauty Community 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 Beauty Community will offset losses from the drop in Beauty Community's long position.| Asia Aviation vs. MCS Steel Public | Asia Aviation vs. Asia Plus Group | Asia Aviation vs. Lalin Property Public | Asia Aviation vs. Lam Soon Public |
| Beauty Community vs. CP ALL Public | Beauty Community vs. Bangkok Dusit Medical | Beauty Community vs. Central Pattana Public | Beauty Community vs. Advanced Info Service |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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