Correlation Between KL Technology and AirAsia X
Can any of the company-specific risk be diversified away by investing in both KL Technology 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 KL Technology and AirAsia X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KL Technology and AirAsia X Bhd, you can compare the effects of market volatilities on KL Technology 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 KL Technology with a short position of AirAsia X. Check out your portfolio center. Please also check ongoing floating volatility patterns of KL Technology and AirAsia X.
Diversification Opportunities for KL Technology and AirAsia X
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KLTE and AirAsia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding KL Technology 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 KL Technology 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 KL Technology 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 KL Technology i.e., KL Technology and AirAsia X go up and down completely randomly.
Pair Corralation between KL Technology and AirAsia X
Assuming the 90 days trading horizon KL Technology is expected to generate 0.68 times more return on investment than AirAsia X. However, KL Technology is 1.48 times less risky than AirAsia X. It trades about -0.16 of its potential returns per unit of risk. AirAsia X Bhd is currently generating about -0.26 per unit of risk. If you would invest 6,402 in KL Technology on October 22, 2024 and sell it today you would lose (273.00) from holding KL Technology or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
KL Technology vs. AirAsia X Bhd
Performance |
| Timeline |
KL Technology and AirAsia X Volatility Contrast
Predicted Return Density |
| Returns |
KL Technology
Pair trading matchups for KL Technology
AirAsia X Bhd
Pair trading matchups for AirAsia X
Pair Trading with KL Technology and AirAsia X
The main advantage of trading using opposite KL Technology and AirAsia X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KL Technology 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.| KL Technology vs. Computer Forms Bhd | KL Technology vs. Choo Bee Metal | KL Technology vs. Greatech Technology Bhd | KL Technology vs. Southern Steel Bhd |
| AirAsia X vs. Eonmetall Group Bhd | AirAsia X vs. Awanbiru Technology Bhd | AirAsia X vs. Apollo Food Holdings | AirAsia X vs. Hong Leong Bank |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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