Correlation Between Pre Built and Asia Aviation
Can any of the company-specific risk be diversified away by investing in both Pre Built 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 Pre Built and Asia Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pre Built Public and Asia Aviation Public, you can compare the effects of market volatilities on Pre Built 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 Pre Built with a short position of Asia Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pre Built and Asia Aviation.
Diversification Opportunities for Pre Built and Asia Aviation
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pre and Asia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pre Built 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 Pre Built 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 Pre Built 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 Pre Built i.e., Pre Built and Asia Aviation go up and down completely randomly.
Pair Corralation between Pre Built and Asia Aviation
Assuming the 90 days trading horizon Pre Built is expected to generate 1.09 times less return on investment than Asia Aviation. In addition to that, Pre Built is 1.0 times more volatile than Asia Aviation Public. It trades about 0.06 of its total potential returns per unit of risk. Asia Aviation Public is currently generating about 0.06 per unit of volatility. If you would invest 194.00 in Asia Aviation Public on September 4, 2024 and sell it today you would earn a total of 92.00 from holding Asia Aviation Public or generate 47.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pre Built Public vs. Asia Aviation Public
Performance |
| Timeline |
| Pre Built Public |
| Asia Aviation Public |
Pre Built and Asia Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pre Built and Asia Aviation
The main advantage of trading using opposite Pre Built and Asia Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pre Built 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.| Pre Built vs. Asia Aviation Public | Pre Built vs. Bangkok Dusit Medical | Pre Built vs. Bangkok Expressway and | Pre Built 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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