Correlation Between Citic Guoan and Spring Airlines

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Can any of the company-specific risk be diversified away by investing in both Citic Guoan and Spring 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 Citic Guoan and Spring Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citic Guoan Wine and Spring Airlines Co, you can compare the effects of market volatilities on Citic Guoan and Spring 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 Citic Guoan with a short position of Spring Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Guoan and Spring Airlines.

Diversification Opportunities for Citic Guoan and Spring Airlines

CiticSpringDiversified AwayCiticSpringDiversified Away100%
0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Citic and Spring is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Spring Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Airlines and Citic Guoan 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 Citic Guoan Wine are associated (or correlated) with Spring Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Airlines has no effect on the direction of Citic Guoan i.e., Citic Guoan and Spring Airlines go up and down completely randomly.

Pair Corralation between Citic Guoan and Spring Airlines

Assuming the 90 days trading horizon Citic Guoan Wine is expected to under-perform the Spring Airlines. In addition to that, Citic Guoan is 1.44 times more volatile than Spring Airlines Co. It trades about -0.02 of its total potential returns per unit of risk. Spring Airlines Co is currently generating about -0.01 per unit of volatility. If you would invest  6,360  in Spring Airlines Co on October 31, 2024 and sell it today you would lose (962.00) from holding Spring Airlines Co or give up 15.13% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Citic Guoan Wine  vs.  Spring Airlines Co

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -15-10-50510
JavaScript chart by amCharts 3.21.15600084 601021
       Timeline  
Citic Guoan Wine 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Citic Guoan Wine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanJan55.566.5
Spring Airlines 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Spring Airlines Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Spring Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanJan525354555657585960

Citic Guoan and Spring Airlines Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.37-3.27-2.18-1.08-0.011.012.043.074.1 0.050.100.15
JavaScript chart by amCharts 3.21.15600084 601021
       Returns  

Pair Trading with Citic Guoan and Spring Airlines

The main advantage of trading using opposite Citic Guoan and Spring Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Guoan position performs unexpectedly, Spring 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 Spring Airlines will offset losses from the drop in Spring Airlines' long position.
The idea behind Citic Guoan Wine and Spring Airlines Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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