Correlation Between Tait Marketing and Air Asia

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

By analyzing existing cross correlation between Tait Marketing Distribution and Air Asia Co, you can compare the effects of market volatilities on Tait Marketing and Air Asia 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 Tait Marketing with a short position of Air Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tait Marketing and Air Asia.

Diversification Opportunities for Tait Marketing and Air Asia

0.3

Correlation Coefficient

Tait Marketing  Air Asia

Weak diversification

The 3 months correlation between Tait and Air is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tait Marketing Distribution and Air Asia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Asia and Tait Marketing 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 Tait Marketing Distribution are associated (or correlated) with Air Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Asia has no effect on the direction of Tait Marketing i.e., Tait Marketing and Air Asia go up and down completely randomly.

Pair Corralation between Tait Marketing and Air Asia

Assuming the 90 days trading horizon Tait Marketing Distribution is expected to generate 0.32 times more return on investment than Air Asia. However, Tait Marketing Distribution is 3.14 times less risky than Air Asia. It trades about 0.19 of its potential returns per unit of risk. Air Asia Co is currently generating about 0.05 per unit of risk. If you would invest  4,010  in Tait Marketing Distribution on December 28, 2024 and sell it today you would earn a total of  410.00  from holding Tait Marketing Distribution or generate 10.22% return on investment over 90 days.

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

Tait Marketing Distribution  vs.  Air Asia Co

Tait Marketing Distr

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tait Marketing Distribution are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tait Marketing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Air Asia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Air Asia Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Air Asia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tait Marketing and Air Asia

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

The idea behind Tait Marketing Distribution and Air Asia 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.