Correlation Between TRON and AirAsia Group
Can any of the company-specific risk be diversified away by investing in both TRON and AirAsia Group 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 TRON and AirAsia Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and AirAsia Group Berhad, you can compare the effects of market volatilities on TRON and AirAsia Group 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 TRON with a short position of AirAsia Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and AirAsia Group.
Diversification Opportunities for TRON and AirAsia Group
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRON and AirAsia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding TRON and AirAsia Group Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirAsia Group Berhad and TRON 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 TRON are associated (or correlated) with AirAsia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirAsia Group Berhad has no effect on the direction of TRON i.e., TRON and AirAsia Group go up and down completely randomly.
Pair Corralation between TRON and AirAsia Group
Assuming the 90 days trading horizon TRON is expected to generate 9.78 times less return on investment than AirAsia Group. But when comparing it to its historical volatility, TRON is 1.88 times less risky than AirAsia Group. It trades about 0.02 of its potential returns per unit of risk. AirAsia Group Berhad is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 15.00 in AirAsia Group Berhad on October 20, 2024 and sell it today you would earn a total of 2.00 from holding AirAsia Group Berhad or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
TRON vs. AirAsia Group Berhad
Performance |
| Timeline |
| TRON |
| AirAsia Group Berhad |
TRON and AirAsia Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and AirAsia Group
The main advantage of trading using opposite TRON and AirAsia Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, AirAsia Group 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 Group will offset losses from the drop in AirAsia Group's long position.The idea behind TRON and AirAsia Group Berhad 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 Group vs. Air New Zealand | AirAsia Group vs. ANA Holdings ADR | AirAsia Group vs. Cebu Air | AirAsia Group vs. Air France KLM SA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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