Correlation Between Dongfeng Automobile and China Southern
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By analyzing existing cross correlation between Dongfeng Automobile Co and China Southern Airlines, you can compare the effects of market volatilities on Dongfeng Automobile and China Southern 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 Dongfeng Automobile with a short position of China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfeng Automobile and China Southern.
Diversification Opportunities for Dongfeng Automobile and China Southern
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongfeng and China is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dongfeng Automobile Co and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines and Dongfeng Automobile 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 Dongfeng Automobile Co are associated (or correlated) with China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of Dongfeng Automobile i.e., Dongfeng Automobile and China Southern go up and down completely randomly.
Pair Corralation between Dongfeng Automobile and China Southern
Assuming the 90 days trading horizon Dongfeng Automobile Co is expected to generate 1.74 times more return on investment than China Southern. However, Dongfeng Automobile is 1.74 times more volatile than China Southern Airlines. It trades about 0.06 of its potential returns per unit of risk. China Southern Airlines is currently generating about 0.07 per unit of risk. If you would invest 655.00 in Dongfeng Automobile Co on September 5, 2024 and sell it today you would earn a total of 111.00 from holding Dongfeng Automobile Co or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.17% |
| Values | Daily Returns |
Dongfeng Automobile Co vs. China Southern Airlines
Performance |
| Timeline |
| Dongfeng Automobile |
| China Southern Airlines |
Dongfeng Automobile and China Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongfeng Automobile and China Southern
The main advantage of trading using opposite Dongfeng Automobile and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongfeng Automobile position performs unexpectedly, China Southern 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 Southern will offset losses from the drop in China Southern's long position.| Dongfeng Automobile vs. Lootom Telcovideo Network | Dongfeng Automobile vs. Beijing Yanjing Brewery | Dongfeng Automobile vs. Jiaozuo Wanfang Aluminum | Dongfeng Automobile vs. Ye Chiu Metal |
| China Southern vs. Xiangyang Automobile Bearing | China Southern vs. Guangdong Marubi Biotechnology | China Southern vs. Jinhe Biotechnology Co | China Southern vs. Dongfeng Automobile 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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