Correlation Between Norwegian Air and ASM Pacific
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and ASM Pacific 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 Norwegian Air and ASM Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwegian Air Shuttle and ASM Pacific Technology, you can compare the effects of market volatilities on Norwegian Air and ASM Pacific 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 Norwegian Air with a short position of ASM Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and ASM Pacific.
Diversification Opportunities for Norwegian Air and ASM Pacific
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Norwegian and ASM is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and ASM Pacific Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASM Pacific Technology and Norwegian Air 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 Norwegian Air Shuttle are associated (or correlated) with ASM Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASM Pacific Technology has no effect on the direction of Norwegian Air i.e., Norwegian Air and ASM Pacific go up and down completely randomly.
Pair Corralation between Norwegian Air and ASM Pacific
Assuming the 90 days horizon Norwegian Air Shuttle is expected to generate 1.21 times more return on investment than ASM Pacific. However, Norwegian Air is 1.21 times more volatile than ASM Pacific Technology. It trades about 0.2 of its potential returns per unit of risk. ASM Pacific Technology is currently generating about 0.18 per unit of risk. If you would invest 106.00 in Norwegian Air Shuttle on April 21, 2025 and sell it today you would earn a total of 43.00 from holding Norwegian Air Shuttle or generate 40.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Norwegian Air Shuttle vs. ASM Pacific Technology
Performance |
Timeline |
Norwegian Air Shuttle |
ASM Pacific Technology |
Norwegian Air and ASM Pacific Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Norwegian Air and ASM Pacific
The main advantage of trading using opposite Norwegian Air and ASM Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, ASM Pacific 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 ASM Pacific will offset losses from the drop in ASM Pacific's long position.Norwegian Air vs. Airports of Thailand | Norwegian Air vs. Airports of Thailand | Norwegian Air vs. Aena SME SA | Norwegian Air vs. AerCap Holdings NV |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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