Correlation Between China Airlines and Synmosa Biopharma
Can any of the company-specific risk be diversified away by investing in both China Airlines and Synmosa Biopharma 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 China Airlines and Synmosa Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Airlines and Synmosa Biopharma, you can compare the effects of market volatilities on China Airlines and Synmosa Biopharma 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 China Airlines with a short position of Synmosa Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Airlines and Synmosa Biopharma.
Diversification Opportunities for China Airlines and Synmosa Biopharma
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Synmosa is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding China Airlines and Synmosa Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synmosa Biopharma and China Airlines 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 China Airlines are associated (or correlated) with Synmosa Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synmosa Biopharma has no effect on the direction of China Airlines i.e., China Airlines and Synmosa Biopharma go up and down completely randomly.
Pair Corralation between China Airlines and Synmosa Biopharma
Assuming the 90 days trading horizon China Airlines is expected to generate 1.6 times more return on investment than Synmosa Biopharma. However, China Airlines is 1.6 times more volatile than Synmosa Biopharma. It trades about 0.05 of its potential returns per unit of risk. Synmosa Biopharma is currently generating about -0.01 per unit of risk. If you would invest 2,110 in China Airlines on August 26, 2024 and sell it today you would earn a total of 350.00 from holding China Airlines or generate 16.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Airlines vs. Synmosa Biopharma
Performance |
| Timeline |
| China Airlines |
| Synmosa Biopharma |
China Airlines and Synmosa Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Airlines and Synmosa Biopharma
The main advantage of trading using opposite China Airlines and Synmosa Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Airlines position performs unexpectedly, Synmosa Biopharma 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 Synmosa Biopharma will offset losses from the drop in Synmosa Biopharma's long position.| China Airlines vs. Eva Airways Corp | China Airlines vs. Evergreen Marine Corp | China Airlines vs. Yang Ming Marine | China Airlines vs. China Steel Corp |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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