Correlation Between Sichuan Fulin and Hainan Airlines
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By analyzing existing cross correlation between Sichuan Fulin Transportation and Hainan Airlines Co, you can compare the effects of market volatilities on Sichuan Fulin 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 Sichuan Fulin with a short position of Hainan Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Fulin and Hainan Airlines.
Diversification Opportunities for Sichuan Fulin and Hainan Airlines
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sichuan and Hainan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Fulin Transportation and Hainan Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Airlines and Sichuan Fulin 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 Sichuan Fulin Transportation 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 Sichuan Fulin i.e., Sichuan Fulin and Hainan Airlines go up and down completely randomly.
Pair Corralation between Sichuan Fulin and Hainan Airlines
Assuming the 90 days trading horizon Sichuan Fulin is expected to generate 1.5 times less return on investment than Hainan Airlines. But when comparing it to its historical volatility, Sichuan Fulin Transportation is 1.16 times less risky than Hainan Airlines. It trades about 0.02 of its potential returns per unit of risk. Hainan Airlines Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Hainan Airlines Co on October 14, 2024 and sell it today you would earn a total of 3.00 from holding Hainan Airlines Co or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Fulin Transportation vs. Hainan Airlines Co
Performance |
| Timeline |
| Sichuan Fulin Transp |
| Hainan Airlines |
Sichuan Fulin and Hainan Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Fulin and Hainan Airlines
The main advantage of trading using opposite Sichuan Fulin and Hainan Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Fulin 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.| Sichuan Fulin vs. Xiangyu Medical Co | Sichuan Fulin vs. Jinhe Biotechnology Co | Sichuan Fulin vs. Winner Medical Co | Sichuan Fulin vs. Montage Technology Co |
| Hainan Airlines vs. Shaanxi Construction Machinery | Hainan Airlines vs. Sichuan Fulin Transportation | Hainan Airlines vs. Lutian Machinery Co | Hainan Airlines vs. Xingguang Agricultural Mach |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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