Correlation Between China Eastern and Longxing Chemical
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By analyzing existing cross correlation between China Eastern Airlines and Longxing Chemical Stock, you can compare the effects of market volatilities on China Eastern and Longxing Chemical 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 China Eastern with a short position of Longxing Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and Longxing Chemical.
Diversification Opportunities for China Eastern and Longxing Chemical
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Longxing is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and Longxing Chemical Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longxing Chemical Stock and China 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 China Eastern Airlines are associated (or correlated) with Longxing Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longxing Chemical Stock has no effect on the direction of China Eastern i.e., China Eastern and Longxing Chemical go up and down completely randomly.
Pair Corralation between China Eastern and Longxing Chemical
Assuming the 90 days trading horizon China Eastern Airlines is expected to under-perform the Longxing Chemical. But the stock apears to be less risky and, when comparing its historical volatility, China Eastern Airlines is 3.37 times less risky than Longxing Chemical. The stock trades about -0.53 of its potential returns per unit of risk. The Longxing Chemical Stock is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 577.00 in Longxing Chemical Stock on October 14, 2024 and sell it today you would lose (68.00) from holding Longxing Chemical Stock or give up 11.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Eastern Airlines vs. Longxing Chemical Stock
Performance |
| Timeline |
| China Eastern Airlines |
| Longxing Chemical Stock |
China Eastern and Longxing Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and Longxing Chemical
The main advantage of trading using opposite China Eastern and Longxing Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, Longxing Chemical 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 Longxing Chemical will offset losses from the drop in Longxing Chemical's long position.| China Eastern vs. BYD Co Ltd | China Eastern vs. China Mobile Limited | China Eastern vs. Agricultural Bank of | China Eastern vs. Industrial and Commercial |
| Longxing Chemical vs. China Eastern Airlines | Longxing Chemical vs. Wuhan Yangtze Communication | Longxing Chemical vs. Jiugui Liquor Co | Longxing Chemical vs. Citic Guoan Wine |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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