Correlation Between AirAsia Group and Air New
Can any of the company-specific risk be diversified away by investing in both AirAsia Group and Air New 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 New 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 New Zealand, you can compare the effects of market volatilities on AirAsia Group and Air New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of AirAsia Group and Air New.
Diversification Opportunities for AirAsia Group and Air New
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AirAsia and Air is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AirAsia Group Berhad and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of AirAsia Group i.e., AirAsia Group and Air New go up and down completely randomly.
Pair Corralation between AirAsia Group and Air New
Assuming the 90 days horizon AirAsia Group Berhad is expected to under-perform the Air New. In addition to that, AirAsia Group is 2.56 times more volatile than Air New Zealand. It trades about -0.05 of its total potential returns per unit of risk. Air New Zealand is currently generating about 0.2 per unit of volatility. If you would invest 151.00 in Air New Zealand on August 28, 2024 and sell it today you would earn a total of 14.00 from holding Air New Zealand or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AirAsia Group Berhad vs. Air New Zealand
Performance |
| Timeline |
| AirAsia Group Berhad |
| Air New Zealand |
AirAsia Group and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AirAsia Group and Air New
The main advantage of trading using opposite AirAsia Group and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AirAsia Group position performs unexpectedly, Air New 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 New will offset losses from the drop in Air New'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 New vs. AirAsia Group Berhad | Air New vs. ANA Holdings ADR | Air New vs. Cebu Air | Air New vs. Air France KLM SA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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