Correlation Between Astar and AirAsia X
Can any of the company-specific risk be diversified away by investing in both Astar and AirAsia X 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 Astar and AirAsia X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and AirAsia X Bhd, you can compare the effects of market volatilities on Astar and AirAsia X 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 Astar with a short position of AirAsia X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and AirAsia X.
Diversification Opportunities for Astar and AirAsia X
Weak diversification
The 3 months correlation between Astar and AirAsia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Astar and AirAsia X Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirAsia X Bhd and Astar 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 Astar are associated (or correlated) with AirAsia X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirAsia X Bhd has no effect on the direction of Astar i.e., Astar and AirAsia X go up and down completely randomly.
Pair Corralation between Astar and AirAsia X
Assuming the 90 days trading horizon Astar is expected to generate 2.21 times more return on investment than AirAsia X. However, Astar is 2.21 times more volatile than AirAsia X Bhd. It trades about 0.05 of its potential returns per unit of risk. AirAsia X Bhd is currently generating about -0.07 per unit of risk. If you would invest 6.20 in Astar on October 20, 2024 and sell it today you would earn a total of 0.16 from holding Astar or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Astar vs. AirAsia X Bhd
Performance |
| Timeline |
| Astar |
| AirAsia X Bhd |
Astar and AirAsia X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and AirAsia X
The main advantage of trading using opposite Astar and AirAsia X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, AirAsia X 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 AirAsia X will offset losses from the drop in AirAsia X's long position.The idea behind Astar and AirAsia X Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AirAsia X vs. YX Precious Metals | AirAsia X vs. Star Media Group | AirAsia X vs. Central Industrial Corp | AirAsia X vs. Sapura Industrial Bhd |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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