Correlation Between Airports and Asia Fiber

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

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

Diversification Opportunities for Airports and Asia Fiber

0.27

Correlation Coefficient

Airports  Asia Fiber

Modest diversification

The 3 months correlation between Airports and Asia is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Asia Fiber Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Fiber Public and Airports 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 Airports of Thailand are associated (or correlated) with Asia Fiber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Fiber Public has no effect on the direction of Airports i.e., Airports and Asia Fiber go up and down completely randomly.

Pair Corralation between Airports and Asia Fiber

Assuming the 90 days trading horizon Airports is expected to generate 1291.24 times less return on investment than Asia Fiber. But when comparing it to its historical volatility, Airports of Thailand is 119.86 times less risky than Asia Fiber. It trades about 0.01 of its potential returns per unit of risk. Asia Fiber Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Asia Fiber Public on September 3, 2024 and sell it today you would earn a total of  480.00  from holding Asia Fiber Public or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Airports of Thailand  vs.  Asia Fiber Public

Airports of Thailand

Risk-Adjusted Performance

0 of 100

Very Weak

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

Asia Fiber Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Fiber Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Asia Fiber disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Airports and Asia Fiber

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

The idea behind Airports of Thailand and Asia Fiber 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.