Correlation Between Glodon Software and Air China
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By analyzing existing cross correlation between Glodon Software Co and Air China Ltd, you can compare the effects of market volatilities on Glodon Software 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 Glodon Software with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glodon Software and Air China.
Diversification Opportunities for Glodon Software and Air China
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Glodon and Air is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Glodon Software Co and Air China Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China and Glodon Software 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 Glodon Software Co 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 Glodon Software i.e., Glodon Software and Air China go up and down completely randomly.
Pair Corralation between Glodon Software and Air China
Assuming the 90 days trading horizon Glodon Software Co is expected to generate 0.78 times more return on investment than Air China. However, Glodon Software Co is 1.28 times less risky than Air China. It trades about 0.42 of its potential returns per unit of risk. Air China Ltd is currently generating about -0.12 per unit of risk. If you would invest 1,072 in Glodon Software Co on November 9, 2024 and sell it today you would earn a total of 156.00 from holding Glodon Software Co or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glodon Software Co vs. Air China Ltd
Performance |
| Timeline |
| Glodon Software |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Air China |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Glodon Software and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glodon Software and Air China
The main advantage of trading using opposite Glodon Software and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glodon Software 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.The idea behind Glodon Software Co and Air China Ltd 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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