Correlation Between Air New and Asara Resources
Can any of the company-specific risk be diversified away by investing in both Air New and Asara Resources 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 Air New and Asara Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Asara Resources, you can compare the effects of market volatilities on Air New and Asara Resources 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 Air New with a short position of Asara Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Asara Resources.
Diversification Opportunities for Air New and Asara Resources
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Asara is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Asara Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asara Resources and Air New 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 Air New Zealand are associated (or correlated) with Asara Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asara Resources has no effect on the direction of Air New i.e., Air New and Asara Resources go up and down completely randomly.
Pair Corralation between Air New and Asara Resources
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.39 times more return on investment than Asara Resources. However, Air New Zealand is 2.56 times less risky than Asara Resources. It trades about 0.17 of its potential returns per unit of risk. Asara Resources is currently generating about -0.2 per unit of risk. If you would invest 51.00 in Air New Zealand on October 14, 2024 and sell it today you would earn a total of 3.00 from holding Air New Zealand or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Asara Resources
Performance |
| Timeline |
| Air New Zealand |
| Asara Resources |
Air New and Asara Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Asara Resources
The main advantage of trading using opposite Air New and Asara Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Asara Resources 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 Asara Resources will offset losses from the drop in Asara Resources' long position.| Air New vs. Aeon Metals | Air New vs. Queste Communications | Air New vs. Aussie Broadband | Air New vs. Falcon Metals |
| Asara Resources vs. Embark Education Group | Asara Resources vs. Dicker Data | Asara Resources vs. Data3 | Asara Resources vs. Air New Zealand |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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