Correlation Between AirAsia Group and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both AirAsia Group and Qantas Airways 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 Qantas Airways 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 Qantas Airways Ltd, you can compare the effects of market volatilities on AirAsia Group and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of AirAsia Group and Qantas Airways.
Diversification Opportunities for AirAsia Group and Qantas Airways
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AirAsia and Qantas is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding AirAsia Group Berhad and Qantas Airways Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of AirAsia Group i.e., AirAsia Group and Qantas Airways go up and down completely randomly.
Pair Corralation between AirAsia Group and Qantas Airways
Assuming the 90 days horizon AirAsia Group Berhad is expected to under-perform the Qantas Airways. In addition to that, AirAsia Group is 3.02 times more volatile than Qantas Airways Ltd. It trades about -0.05 of its total potential returns per unit of risk. Qantas Airways Ltd is currently generating about 0.19 per unit of volatility. If you would invest 2,693 in Qantas Airways Ltd on August 29, 2024 and sell it today you would earn a total of 198.00 from holding Qantas Airways Ltd or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AirAsia Group Berhad vs. Qantas Airways Ltd
Performance |
| Timeline |
| AirAsia Group Berhad |
| Qantas Airways |
AirAsia Group and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AirAsia Group and Qantas Airways
The main advantage of trading using opposite AirAsia Group and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AirAsia Group position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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