Correlation Between CH Karnchang and Asia Aviation

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

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

Diversification Opportunities for CH Karnchang and Asia Aviation

-0.14

Correlation Coefficient

CH Karnchang  Asia Aviation

Good diversification

The 3 months correlation between CH Karnchang and Asia is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CH Karnchang Public and Asia Aviation Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Aviation Public and CH Karnchang 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 CH Karnchang Public are associated (or correlated) with Asia Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Aviation Public has no effect on the direction of CH Karnchang i.e., CH Karnchang and Asia Aviation go up and down completely randomly.

Pair Corralation between CH Karnchang and Asia Aviation

Assuming the 90 days horizon CH Karnchang is expected to generate 10.83 times less return on investment than Asia Aviation. But when comparing it to its historical volatility, CH Karnchang Public is 1.25 times less risky than Asia Aviation. It trades about 0.01 of its potential returns per unit of risk. Asia Aviation Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  248.00  in Asia Aviation Public on September 5, 2024 and sell it today you would earn a total of  38.00  from holding Asia Aviation Public or generate 15.32% return on investment over 90 days.

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

CH Karnchang Public  vs.  Asia Aviation Public

CH Karnchang Public

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CH Karnchang Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, CH Karnchang is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asia Aviation Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Aviation Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Aviation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CH Karnchang and Asia Aviation

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

The idea behind CH Karnchang Public and Asia Aviation 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.