Correlation Between China Airlines and Sino American
Can any of the company-specific risk be diversified away by investing in both China Airlines and Sino American 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 Sino American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Airlines and Sino American Silicon Products, you can compare the effects of market volatilities on China Airlines and Sino American 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 Sino American. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Airlines and Sino American.
Diversification Opportunities for China Airlines and Sino American
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Sino is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding China Airlines and Sino American Silicon Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino American Silicon 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 Sino American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino American Silicon has no effect on the direction of China Airlines i.e., China Airlines and Sino American go up and down completely randomly.
Pair Corralation between China Airlines and Sino American
Assuming the 90 days trading horizon China Airlines is expected to generate 0.91 times more return on investment than Sino American. However, China Airlines is 1.1 times less risky than Sino American. It trades about 0.06 of its potential returns per unit of risk. Sino American Silicon Products is currently generating about -0.06 per unit of risk. If you would invest 2,000 in China Airlines on December 11, 2024 and sell it today you would earn a total of 510.00 from holding China Airlines or generate 25.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Airlines vs. Sino American Silicon Products
Performance |
| Timeline |
| China Airlines |
| Sino American Silicon |
China Airlines and Sino American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Airlines and Sino American
The main advantage of trading using opposite China Airlines and Sino American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Airlines position performs unexpectedly, Sino American 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 Sino American will offset losses from the drop in Sino American's long position.| China Airlines vs. Eva Airways 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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