Correlation Between Visa and AirAsia X
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and AirAsia X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and AirAsia X Bhd, you can compare the effects of market volatilities on Visa 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 Visa with a short position of AirAsia X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AirAsia X.
Diversification Opportunities for Visa and AirAsia X
Pay attention - limited upside
The 3 months correlation between Visa and AirAsia is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and AirAsia X go up and down completely randomly.
Pair Corralation between Visa and AirAsia X
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.29 times more return on investment than AirAsia X. However, Visa Class A is 3.44 times less risky than AirAsia X. It trades about 0.28 of its potential returns per unit of risk. AirAsia X Bhd is currently generating about -0.31 per unit of risk. If you would invest 34,524 in Visa Class A on December 5, 2024 and sell it today you would earn a total of 1,658 from holding Visa Class A or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. AirAsia X Bhd
Performance |
| Timeline |
| Visa Class A |
| AirAsia X Bhd |
Visa and AirAsia X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and AirAsia X
The main advantage of trading using opposite Visa and AirAsia X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| AirAsia X vs. Malayan Banking Bhd | AirAsia X vs. Public Bank Bhd | AirAsia X vs. Petronas Chemicals Group | AirAsia X vs. Tenaga Nasional 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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