Correlation Between AirAsia Group and Air France
Can any of the company-specific risk be diversified away by investing in both AirAsia Group and Air France 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 AirAsia Group and Air France into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AirAsia Group Berhad and Air France KLM, you can compare the effects of market volatilities on AirAsia Group and Air France 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 AirAsia Group with a short position of Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of AirAsia Group and Air France.
Diversification Opportunities for AirAsia Group and Air France
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AirAsia and Air is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AirAsia Group Berhad and Air France KLM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM and AirAsia Group 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 AirAsia Group Berhad are associated (or correlated) with Air France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air France KLM has no effect on the direction of AirAsia Group i.e., AirAsia Group and Air France go up and down completely randomly.
Pair Corralation between AirAsia Group and Air France
Assuming the 90 days horizon AirAsia Group Berhad is expected to generate 2.04 times more return on investment than Air France. However, AirAsia Group is 2.04 times more volatile than Air France KLM. It trades about -0.05 of its potential returns per unit of risk. Air France KLM is currently generating about -0.4 per unit of risk. If you would invest 22.00 in AirAsia Group Berhad on August 29, 2024 and sell it today you would lose (2.00) from holding AirAsia Group Berhad or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AirAsia Group Berhad vs. Air France KLM
Performance |
| Timeline |
| AirAsia Group Berhad |
| Air France KLM |
AirAsia Group and Air France Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AirAsia Group and Air France
The main advantage of trading using opposite AirAsia Group and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AirAsia Group position performs unexpectedly, Air France 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 France will offset losses from the drop in Air France's long position.| AirAsia Group vs. Air New Zealand | AirAsia Group vs. ANA Holdings ADR | AirAsia Group vs. Cebu Air | AirAsia Group vs. Air France KLM SA |
| Air France vs. Deere Company | Air France vs. Columbus McKinnon | Air France vs. Hyster Yale Materials Handling | Air France vs. Manitowoc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |