Correlation Between ADHI KARYA and Qantas Airways

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

By analyzing existing cross correlation between ADHI KARYA and Qantas Airways Limited, you can compare the effects of market volatilities on ADHI KARYA and Qantas Airways 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 ADHI KARYA with a short position of Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADHI KARYA and Qantas Airways.

Diversification Opportunities for ADHI KARYA and Qantas Airways

0.01

Correlation Coefficient

ADHI KARYA  Qantas Airways

Significant diversification

The 3 months correlation between ADHI and Qantas is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ADHI KARYA and Qantas Airways Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways and ADHI KARYA 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 ADHI KARYA are associated (or correlated) with Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of ADHI KARYA i.e., ADHI KARYA and Qantas Airways go up and down completely randomly.

Pair Corralation between ADHI KARYA and Qantas Airways

Assuming the 90 days trading horizon ADHI KARYA is expected to generate 11.87 times more return on investment than Qantas Airways. However, ADHI KARYA is 11.87 times more volatile than Qantas Airways Limited. It trades about 0.12 of its potential returns per unit of risk. Qantas Airways Limited is currently generating about 0.05 per unit of risk. If you would invest  0.80  in ADHI KARYA on December 29, 2024 and sell it today you would earn a total of  0.20  from holding ADHI KARYA or generate 25.0% return on investment over 90 days.

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

ADHI KARYA  vs.  Qantas Airways Limited

ADHI KARYA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADHI KARYA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ADHI KARYA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Qantas Airways

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Qantas Airways may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ADHI KARYA and Qantas Airways

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

The idea behind ADHI KARYA and Qantas Airways Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.