Correlation Between S Tech and China Airlines
Can any of the company-specific risk be diversified away by investing in both S Tech and China Airlines 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 S Tech and China Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between S Tech Corp and China Airlines, you can compare the effects of market volatilities on S Tech and China 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 S Tech with a short position of China Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of S Tech and China Airlines.
Diversification Opportunities for S Tech and China Airlines
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 1584 and China is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding S Tech Corp and China Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Airlines and S Tech 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 S Tech Corp are associated (or correlated) with China Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Airlines has no effect on the direction of S Tech i.e., S Tech and China Airlines go up and down completely randomly.
Pair Corralation between S Tech and China Airlines
Assuming the 90 days trading horizon S Tech Corp is expected to under-perform the China Airlines. In addition to that, S Tech is 1.08 times more volatile than China Airlines. It trades about 0.0 of its total potential returns per unit of risk. China Airlines is currently generating about 0.02 per unit of volatility. If you would invest 2,260 in China Airlines on August 27, 2024 and sell it today you would earn a total of 200.00 from holding China Airlines or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
S Tech Corp vs. China Airlines
Performance |
| Timeline |
| S Tech Corp |
| China Airlines |
S Tech and China Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S Tech and China Airlines
The main advantage of trading using opposite S Tech and China Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S Tech position performs unexpectedly, China 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 China Airlines will offset losses from the drop in China Airlines' long position.| S Tech vs. Catcher Technology Co | S Tech vs. Solar Applied Materials | S Tech vs. Shin Zu Shing | S Tech vs. China Metal Products |
| China Airlines vs. Sunny Friend Environmental | China Airlines vs. TTET Union Corp | China Airlines vs. ECOVE Environment Corp | China Airlines vs. Yulon Finance Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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