Correlation Between Demco Public and Asia Aviation
Can any of the company-specific risk be diversified away by investing in both Demco Public and Asia Aviation 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 Demco Public and Asia Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Demco Public and Asia Aviation Public, you can compare the effects of market volatilities on Demco Public and Asia Aviation 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 Demco Public with a short position of Asia Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Demco Public and Asia Aviation.
Diversification Opportunities for Demco Public and Asia Aviation
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Demco and Asia is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Demco Public and Asia Aviation Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Aviation Public and Demco Public 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 Demco Public are associated (or correlated) with Asia Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Aviation Public has no effect on the direction of Demco Public i.e., Demco Public and Asia Aviation go up and down completely randomly.
Pair Corralation between Demco Public and Asia Aviation
Assuming the 90 days trading horizon Demco Public is expected to generate 1.6 times more return on investment than Asia Aviation. However, Demco Public is 1.6 times more volatile than Asia Aviation Public. It trades about 0.01 of its potential returns per unit of risk. Asia Aviation Public is currently generating about -0.05 per unit of risk. If you would invest 346.00 in Demco Public on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Demco Public or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Demco Public vs. Asia Aviation Public
Performance |
| Timeline |
| Demco Public |
| Asia Aviation Public |
Demco Public and Asia Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Demco Public and Asia Aviation
The main advantage of trading using opposite Demco Public and Asia Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Demco Public position performs unexpectedly, Asia Aviation 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 Asia Aviation will offset losses from the drop in Asia Aviation's long position.| Demco Public vs. Asia Aviation Public | Demco Public vs. Bangkok Dusit Medical | Demco Public vs. Bangkok Expressway and | Demco Public vs. Airports of Thailand |
| Asia Aviation vs. Airports of Thailand | Asia Aviation vs. Bangkok Expressway and | Asia Aviation vs. BTS Group Holdings | Asia Aviation vs. Bangkok Airways Public |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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