Correlation Between Xiangyang Automobile and Hainan Airlines

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Xiangyang Automobile and Hainan Airlines 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 Xiangyang Automobile and Hainan Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiangyang Automobile Bearing and Hainan Airlines Co, you can compare the effects of market volatilities on Xiangyang Automobile and Hainan Airlines 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 Xiangyang Automobile with a short position of Hainan Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangyang Automobile and Hainan Airlines.

Diversification Opportunities for Xiangyang Automobile and Hainan Airlines

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Xiangyang and Hainan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyang Automobile Bearing and Hainan Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Airlines and Xiangyang Automobile 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 Xiangyang Automobile Bearing are associated (or correlated) with Hainan Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Airlines has no effect on the direction of Xiangyang Automobile i.e., Xiangyang Automobile and Hainan Airlines go up and down completely randomly.

Pair Corralation between Xiangyang Automobile and Hainan Airlines

Assuming the 90 days trading horizon Xiangyang Automobile Bearing is expected to under-perform the Hainan Airlines. In addition to that, Xiangyang Automobile is 1.94 times more volatile than Hainan Airlines Co. It trades about -0.16 of its total potential returns per unit of risk. Hainan Airlines Co is currently generating about 0.01 per unit of volatility. If you would invest  30.00  in Hainan Airlines Co on October 16, 2024 and sell it today you would earn a total of  0.00  from holding Hainan Airlines Co or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Xiangyang Automobile Bearing  vs.  Hainan Airlines Co

 Performance 
       Timeline  
Xiangyang Automobile 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Xiangyang Automobile Bearing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangyang Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.
Hainan Airlines 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Hainan Airlines Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hainan Airlines sustained solid returns over the last few months and may actually be approaching a breakup point.

Xiangyang Automobile and Hainan Airlines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xiangyang Automobile and Hainan Airlines

The main advantage of trading using opposite Xiangyang Automobile and Hainan Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiangyang Automobile position performs unexpectedly, Hainan Airlines 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 Hainan Airlines will offset losses from the drop in Hainan Airlines' long position.
The idea behind Xiangyang Automobile Bearing and Hainan Airlines 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

Other Complementary Tools

Fundamental Analysis
View fundamental data based on most recent published financial statements
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments