Correlation Between Focus Home and China Eastern
Can any of the company-specific risk be diversified away by investing in both Focus Home and China Eastern 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 Focus Home and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Home Interactive and China Eastern Airlines, you can compare the effects of market volatilities on Focus Home and China Eastern 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 Focus Home with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and China Eastern.
Diversification Opportunities for Focus Home and China Eastern
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Focus and China is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and Focus Home 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 Focus Home Interactive are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Focus Home i.e., Focus Home and China Eastern go up and down completely randomly.
Pair Corralation between Focus Home and China Eastern
Assuming the 90 days horizon Focus Home is expected to generate 61.09 times less return on investment than China Eastern. But when comparing it to its historical volatility, Focus Home Interactive is 1.16 times less risky than China Eastern. It trades about 0.0 of its potential returns per unit of risk. China Eastern Airlines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 24.00 in China Eastern Airlines on October 14, 2024 and sell it today you would earn a total of 5.00 from holding China Eastern Airlines or generate 20.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Home Interactive vs. China Eastern Airlines
Performance |
| Timeline |
| Focus Home Interactive |
| China Eastern Airlines |
Focus Home and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and China Eastern
The main advantage of trading using opposite Focus Home and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, China Eastern 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 Eastern will offset losses from the drop in China Eastern's long position.| Focus Home vs. Playtech plc | Focus Home vs. InPlay Oil Corp | Focus Home vs. Geely Automobile Holdings | Focus Home vs. COLUMBIA SPORTSWEAR |
| China Eastern vs. GOLD ROAD RES | China Eastern vs. TRAINLINE PLC LS | China Eastern vs. Focus Home Interactive | China Eastern vs. 24SEVENOFFICE GROUP AB |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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