Correlation Between Asia Aviation and Ai Energy

Can any of the company-specific risk be diversified away by investing in both Asia Aviation and Ai Energy 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 Asia Aviation and Ai Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Aviation Public and Ai Energy Public, you can compare the effects of market volatilities on Asia Aviation and Ai Energy 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 Asia Aviation with a short position of Ai Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Aviation and Ai Energy.

Diversification Opportunities for Asia Aviation and Ai Energy

-0.75

Correlation Coefficient

Asia Aviation  Ai Energy

Pay attention - limited upside

The 3 months correlation between Asia and AIE is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Asia Aviation Public and Ai Energy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ai Energy Public and Asia Aviation 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 Asia Aviation Public are associated (or correlated) with Ai Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ai Energy Public has no effect on the direction of Asia Aviation i.e., Asia Aviation and Ai Energy go up and down completely randomly.

Pair Corralation between Asia Aviation and Ai Energy

Assuming the 90 days trading horizon Asia Aviation Public is expected to generate 1.51 times more return on investment than Ai Energy. However, Asia Aviation is 1.51 times more volatile than Ai Energy Public. It trades about 0.07 of its potential returns per unit of risk. Ai Energy Public is currently generating about -0.06 per unit of risk. If you would invest  262.00  in Asia Aviation Public on September 17, 2024 and sell it today you would earn a total of  20.00  from holding Asia Aviation Public or generate 7.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Asia Aviation Public  vs.  Ai Energy Public

Asia Aviation Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Aviation Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Aviation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ai Energy Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ai Energy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Ai Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asia Aviation and Ai Energy

The main advantage of trading using opposite Asia Aviation and Ai Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Aviation position performs unexpectedly, Ai Energy 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 Ai Energy will offset losses from the drop in Ai Energy's long position.

The idea behind Asia Aviation Public and Ai Energy Public 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.