Correlation Between NAGOYA RAILROAD and China Eastern
Can any of the company-specific risk be diversified away by investing in both NAGOYA RAILROAD and China Eastern 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 NAGOYA RAILROAD and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NAGOYA RAILROAD and China Eastern Airlines, you can compare the effects of market volatilities on NAGOYA RAILROAD and China Eastern 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 NAGOYA RAILROAD with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAGOYA RAILROAD and China Eastern.
Diversification Opportunities for NAGOYA RAILROAD and China Eastern
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NAGOYA and China is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NAGOYA RAILROAD and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and NAGOYA RAILROAD 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 NAGOYA RAILROAD are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of NAGOYA RAILROAD i.e., NAGOYA RAILROAD and China Eastern go up and down completely randomly.
Pair Corralation between NAGOYA RAILROAD and China Eastern
Assuming the 90 days horizon NAGOYA RAILROAD is expected to generate 0.58 times more return on investment than China Eastern. However, NAGOYA RAILROAD is 1.73 times less risky than China Eastern. It trades about 0.05 of its potential returns per unit of risk. China Eastern Airlines is currently generating about -0.21 per unit of risk. If you would invest 1,040 in NAGOYA RAILROAD on October 11, 2024 and sell it today you would earn a total of 10.00 from holding NAGOYA RAILROAD or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAGOYA RAILROAD vs. China Eastern Airlines
Performance |
| Timeline |
| NAGOYA RAILROAD |
| China Eastern Airlines |
NAGOYA RAILROAD and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAGOYA RAILROAD and China Eastern
The main advantage of trading using opposite NAGOYA RAILROAD and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAGOYA RAILROAD position performs unexpectedly, China Eastern 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 Eastern will offset losses from the drop in China Eastern's long position.| NAGOYA RAILROAD vs. Scottish Mortgage Investment | NAGOYA RAILROAD vs. CHRYSALIS INVESTMENTS LTD | NAGOYA RAILROAD vs. Apollo Investment Corp | NAGOYA RAILROAD vs. HK Electric Investments |
| China Eastern vs. GREENX METALS LTD | China Eastern vs. GALENA MINING LTD | China Eastern vs. Calibre Mining Corp | China Eastern vs. Astral Foods Limited |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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