Correlation Between Morgan Stanley and Air Asia
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley 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 Morgan Stanley and Air Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Direct and Air Asia Co, you can compare the effects of market volatilities on Morgan Stanley 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 Morgan Stanley with a short position of Air Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Air Asia.
Diversification Opportunities for Morgan Stanley and Air Asia
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Morgan and Air is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Air Asia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Asia and Morgan Stanley 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 Morgan Stanley Direct 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 Morgan Stanley i.e., Morgan Stanley and Air Asia go up and down completely randomly.
Pair Corralation between Morgan Stanley and Air Asia
Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Air Asia. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 2.91 times less risky than Air Asia. The stock trades about 0.0 of its potential returns per unit of risk. The Air Asia Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,200 in Air Asia Co on December 5, 2024 and sell it today you would earn a total of 430.00 from holding Air Asia Co or generate 13.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 93.22% |
Values | Daily Returns |
Morgan Stanley Direct vs. Air Asia Co
Performance |
Timeline |
Morgan Stanley Direct |
Air Asia |
Morgan Stanley and Air Asia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Air Asia
The main advantage of trading using opposite Morgan Stanley and Air Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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.Morgan Stanley vs. Harmony Gold Mining | Morgan Stanley vs. RTG Mining | Morgan Stanley vs. Brandywine Realty Trust | Morgan Stanley vs. PepsiCo |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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