Correlation Between Asiana Airlines and BIT Computer

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Can any of the company-specific risk be diversified away by investing in both Asiana Airlines and BIT Computer 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 Asiana Airlines and BIT Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asiana Airlines and BIT Computer Co, you can compare the effects of market volatilities on Asiana Airlines and BIT Computer 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 Asiana Airlines with a short position of BIT Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiana Airlines and BIT Computer.

Diversification Opportunities for Asiana Airlines and BIT Computer

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Asiana and BIT is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Asiana Airlines and BIT Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIT Computer and Asiana Airlines 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 Asiana Airlines are associated (or correlated) with BIT Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIT Computer has no effect on the direction of Asiana Airlines i.e., Asiana Airlines and BIT Computer go up and down completely randomly.

Pair Corralation between Asiana Airlines and BIT Computer

Assuming the 90 days trading horizon Asiana Airlines is expected to generate 1.74 times less return on investment than BIT Computer. But when comparing it to its historical volatility, Asiana Airlines is 1.78 times less risky than BIT Computer. It trades about 0.31 of its potential returns per unit of risk. BIT Computer Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  435,399  in BIT Computer Co on October 8, 2024 and sell it today you would earn a total of  63,601  from holding BIT Computer Co or generate 14.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Asiana Airlines  vs.  BIT Computer Co

 Performance 
       Timeline  
Asiana Airlines 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Asiana Airlines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Asiana Airlines sustained solid returns over the last few months and may actually be approaching a breakup point.
BIT Computer 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BIT Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BIT Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Asiana Airlines and BIT Computer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Asiana Airlines and BIT Computer

The main advantage of trading using opposite Asiana Airlines and BIT Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asiana Airlines position performs unexpectedly, BIT Computer 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 BIT Computer will offset losses from the drop in BIT Computer's long position.
The idea behind Asiana Airlines and BIT Computer Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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