Correlation Between China Airlines and Handa Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both China Airlines and Handa Pharmaceuticals 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 Handa Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Airlines and Handa Pharmaceuticals, you can compare the effects of market volatilities on China Airlines and Handa Pharmaceuticals 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 Handa Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Airlines and Handa Pharmaceuticals.
Diversification Opportunities for China Airlines and Handa Pharmaceuticals
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Handa is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding China Airlines and Handa Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handa Pharmaceuticals 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 Handa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handa Pharmaceuticals has no effect on the direction of China Airlines i.e., China Airlines and Handa Pharmaceuticals go up and down completely randomly.
Pair Corralation between China Airlines and Handa Pharmaceuticals
Assuming the 90 days trading horizon China Airlines is expected to generate 0.59 times more return on investment than Handa Pharmaceuticals. However, China Airlines is 1.69 times less risky than Handa Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Handa Pharmaceuticals is currently generating about -0.02 per unit of risk. If you would invest 1,965 in China Airlines on August 30, 2024 and sell it today you would earn a total of 525.00 from holding China Airlines or generate 26.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
China Airlines vs. Handa Pharmaceuticals
Performance |
| Timeline |
| China Airlines |
| Handa Pharmaceuticals |
China Airlines and Handa Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Airlines and Handa Pharmaceuticals
The main advantage of trading using opposite China Airlines and Handa Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Airlines position performs unexpectedly, Handa Pharmaceuticals 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 Handa Pharmaceuticals will offset losses from the drop in Handa Pharmaceuticals' long position.| China Airlines vs. Yulon Motor Co | China Airlines vs. Far Eastern Department | China Airlines vs. China Steel Corp | China Airlines vs. Chang Hwa Commercial |
| Handa Pharmaceuticals vs. Johnson Health Tech | Handa Pharmaceuticals vs. Ma Kuang Healthcare | Handa Pharmaceuticals vs. Chung Hung Steel | Handa Pharmaceuticals vs. STARLUX Airlines Co |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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