Correlation Between STARLUX Airlines and Zhen Ding
Can any of the company-specific risk be diversified away by investing in both STARLUX Airlines and Zhen Ding 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 STARLUX Airlines and Zhen Ding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STARLUX Airlines Co and Zhen Ding Technology, you can compare the effects of market volatilities on STARLUX Airlines and Zhen Ding 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 STARLUX Airlines with a short position of Zhen Ding. Check out your portfolio center. Please also check ongoing floating volatility patterns of STARLUX Airlines and Zhen Ding.
Diversification Opportunities for STARLUX Airlines and Zhen Ding
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STARLUX and Zhen is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding STARLUX Airlines Co and Zhen Ding Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhen Ding Technology and STARLUX 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 STARLUX Airlines Co are associated (or correlated) with Zhen Ding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhen Ding Technology has no effect on the direction of STARLUX Airlines i.e., STARLUX Airlines and Zhen Ding go up and down completely randomly.
Pair Corralation between STARLUX Airlines and Zhen Ding
Assuming the 90 days trading horizon STARLUX Airlines Co is expected to under-perform the Zhen Ding. But the stock apears to be less risky and, when comparing its historical volatility, STARLUX Airlines Co is 1.0 times less risky than Zhen Ding. The stock trades about -0.02 of its potential returns per unit of risk. The Zhen Ding Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 10,750 in Zhen Ding Technology on August 31, 2024 and sell it today you would earn a total of 700.00 from holding Zhen Ding Technology or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.46% |
| Values | Daily Returns |
STARLUX Airlines Co vs. Zhen Ding Technology
Performance |
| Timeline |
| STARLUX Airlines |
| Zhen Ding Technology |
STARLUX Airlines and Zhen Ding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STARLUX Airlines and Zhen Ding
The main advantage of trading using opposite STARLUX Airlines and Zhen Ding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STARLUX Airlines position performs unexpectedly, Zhen Ding 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 Zhen Ding will offset losses from the drop in Zhen Ding's long position.| STARLUX Airlines vs. Taiwan Semiconductor Manufacturing | STARLUX Airlines vs. Hon Hai Precision | STARLUX Airlines vs. MediaTek | STARLUX Airlines vs. Chunghwa Telecom 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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