Correlation Between HanS Laser and China Express

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Can any of the company-specific risk be diversified away by investing in both HanS Laser and China Express 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 HanS Laser and China Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HanS Laser Tech and China Express Airlines, you can compare the effects of market volatilities on HanS Laser and China Express 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 HanS Laser with a short position of China Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of HanS Laser and China Express.

Diversification Opportunities for HanS Laser and China Express

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between HanS and China is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding HanS Laser Tech and China Express Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Express Airlines and HanS Laser 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 HanS Laser Tech are associated (or correlated) with China Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Express Airlines has no effect on the direction of HanS Laser i.e., HanS Laser and China Express go up and down completely randomly.

Pair Corralation between HanS Laser and China Express

Assuming the 90 days trading horizon HanS Laser Tech is expected to generate 1.9 times more return on investment than China Express. However, HanS Laser is 1.9 times more volatile than China Express Airlines. It trades about -0.08 of its potential returns per unit of risk. China Express Airlines is currently generating about -0.17 per unit of risk. If you would invest  2,894  in HanS Laser Tech on September 12, 2024 and sell it today you would lose (184.00) from holding HanS Laser Tech or give up 6.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

HanS Laser Tech  vs.  China Express Airlines

 Performance 
       Timeline  
HanS Laser Tech 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in HanS Laser Tech are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HanS Laser sustained solid returns over the last few months and may actually be approaching a breakup point.
China Express Airlines 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in China Express Airlines are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Express sustained solid returns over the last few months and may actually be approaching a breakup point.

HanS Laser and China Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HanS Laser and China Express

The main advantage of trading using opposite HanS Laser and China Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HanS Laser position performs unexpectedly, China Express 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 China Express will offset losses from the drop in China Express' long position.
HanS Laser vs. Agricultural Bank of
HanS Laser vs. Industrial and Commercial
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HanS Laser vs. PetroChina Co Ltd
The idea behind HanS Laser Tech and China Express Airlines 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.
China Express vs. Agricultural Bank of
China Express vs. Industrial and Commercial
China Express vs. Bank of China
China Express vs. PetroChina Co Ltd
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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