Correlation Between China Merchants and Air China
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By analyzing existing cross correlation between China Merchants Shekou and Air China Ltd, you can compare the effects of market volatilities on China Merchants and Air China 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 China Merchants with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Air China.
Diversification Opportunities for China Merchants and Air China
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Air is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and Air China Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China and China Merchants 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 China Merchants Shekou are associated (or correlated) with Air China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air China has no effect on the direction of China Merchants i.e., China Merchants and Air China go up and down completely randomly.
Pair Corralation between China Merchants and Air China
Assuming the 90 days trading horizon China Merchants Shekou is expected to under-perform the Air China. In addition to that, China Merchants is 1.14 times more volatile than Air China Ltd. It trades about -0.06 of its total potential returns per unit of risk. Air China Ltd is currently generating about 0.39 per unit of volatility. If you would invest 743.00 in Air China Ltd on September 14, 2024 and sell it today you would earn a total of 136.00 from holding Air China Ltd or generate 18.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Shekou vs. Air China Ltd
Performance |
| Timeline |
| China Merchants Shekou |
| Air China |
China Merchants and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Air China
The main advantage of trading using opposite China Merchants and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Air China 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 China will offset losses from the drop in Air China's long position.| China Merchants vs. China National Software | China Merchants vs. AVIC Fund Management | China Merchants vs. Ningxia Younglight Chemicals | China Merchants vs. Linewell Software Co |
| Air China vs. China State Construction | Air China vs. Poly Real Estate | Air China vs. China Vanke Co | Air China vs. China Merchants Shekou |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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