Correlation Between AirAsia Group and Norse Atlantic
Can any of the company-specific risk be diversified away by investing in both AirAsia Group and Norse Atlantic 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 Norse Atlantic 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 Norse Atlantic ASA, you can compare the effects of market volatilities on AirAsia Group and Norse Atlantic 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 Norse Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of AirAsia Group and Norse Atlantic.
Diversification Opportunities for AirAsia Group and Norse Atlantic
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AirAsia and Norse is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding AirAsia Group Berhad and Norse Atlantic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norse Atlantic ASA 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 Norse Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norse Atlantic ASA has no effect on the direction of AirAsia Group i.e., AirAsia Group and Norse Atlantic go up and down completely randomly.
Pair Corralation between AirAsia Group and Norse Atlantic
Assuming the 90 days horizon AirAsia Group Berhad is expected to generate 2.29 times more return on investment than Norse Atlantic. However, AirAsia Group is 2.29 times more volatile than Norse Atlantic ASA. It trades about 0.11 of its potential returns per unit of risk. Norse Atlantic ASA is currently generating about 0.11 per unit of risk. If you would invest 15.00 in AirAsia Group Berhad on October 20, 2024 and sell it today you would earn a total of 2.00 from holding AirAsia Group Berhad or generate 13.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 84.21% |
Values | Daily Returns |
AirAsia Group Berhad vs. Norse Atlantic ASA
Performance |
Timeline |
AirAsia Group Berhad |
Norse Atlantic ASA |
AirAsia Group and Norse Atlantic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AirAsia Group and Norse Atlantic
The main advantage of trading using opposite AirAsia Group and Norse Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AirAsia Group position performs unexpectedly, Norse Atlantic 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 Norse Atlantic will offset losses from the drop in Norse Atlantic'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 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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