Correlation Between China Eastern and Inner Mongolia
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By analyzing existing cross correlation between China Eastern Airlines and Inner Mongolia BaoTou, you can compare the effects of market volatilities on China Eastern and Inner Mongolia 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 Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and Inner Mongolia.
Diversification Opportunities for China Eastern and Inner Mongolia
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Inner is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and Inner Mongolia BaoTou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia BaoTou 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 Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia BaoTou has no effect on the direction of China Eastern i.e., China Eastern and Inner Mongolia go up and down completely randomly.
Pair Corralation between China Eastern and Inner Mongolia
Assuming the 90 days trading horizon China Eastern Airlines is expected to under-perform the Inner Mongolia. But the stock apears to be less risky and, when comparing its historical volatility, China Eastern Airlines is 1.15 times less risky than Inner Mongolia. The stock trades about -0.04 of its potential returns per unit of risk. The Inner Mongolia BaoTou is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 205.00 in Inner Mongolia BaoTou on October 27, 2024 and sell it today you would lose (25.00) from holding Inner Mongolia BaoTou or give up 12.2% 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. Inner Mongolia BaoTou
Performance |
| Timeline |
| China Eastern Airlines |
| Inner Mongolia BaoTou |
China Eastern and Inner Mongolia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and Inner Mongolia
The main advantage of trading using opposite China Eastern and Inner Mongolia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, Inner Mongolia 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 Inner Mongolia will offset losses from the drop in Inner Mongolia's long position.| China Eastern vs. Hubei Geoway Investment | China Eastern vs. Liaoning Chengda Biotechnology | China Eastern vs. Changchun BCHT Biotechnology | China Eastern vs. Jiangsu GDK Biotechnology |
| Inner Mongolia vs. China Eastern Airlines | Inner Mongolia vs. Eastroc Beverage Group | Inner Mongolia vs. Muyuan Foodstuff Co | Inner Mongolia vs. Youyou Foods 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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