Correlation Between Far Eastern and China Airlines
Can any of the company-specific risk be diversified away by investing in both Far Eastern 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 Far Eastern and China Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far Eastern Department and China Airlines, you can compare the effects of market volatilities on Far Eastern 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 Far Eastern with a short position of China Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and China Airlines.
Diversification Opportunities for Far Eastern and China Airlines
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Far and China is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern Department and China Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Airlines and Far Eastern 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 Far Eastern Department 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 Far Eastern i.e., Far Eastern and China Airlines go up and down completely randomly.
Pair Corralation between Far Eastern and China Airlines
Assuming the 90 days trading horizon Far Eastern Department is expected to under-perform the China Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Far Eastern Department is 1.17 times less risky than China Airlines. The stock trades about -0.12 of its potential returns per unit of risk. The China Airlines is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,215 in China Airlines on September 1, 2024 and sell it today you would earn a total of 275.00 from holding China Airlines or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far Eastern Department vs. China Airlines
Performance |
| Timeline |
| Far Eastern Department |
| China Airlines |
Far Eastern and China Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and China Airlines
The main advantage of trading using opposite Far Eastern and China Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern 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.| Far Eastern vs. Chaintech Technology Corp | Far Eastern vs. AVerMedia Technologies | Far Eastern vs. Avision | Far Eastern vs. Clevo Co |
| China Airlines vs. Eva Airways Corp | China Airlines vs. Evergreen Marine Corp | China Airlines vs. Yang Ming Marine | China Airlines vs. China Steel 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |