Correlation Between China Eastern and Shanghai Rongtai
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By analyzing existing cross correlation between China Eastern Airlines and Shanghai Rongtai Health, you can compare the effects of market volatilities on China Eastern and Shanghai Rongtai 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 Shanghai Rongtai. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and Shanghai Rongtai.
Diversification Opportunities for China Eastern and Shanghai Rongtai
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Shanghai is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and Shanghai Rongtai Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Rongtai Health 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 Shanghai Rongtai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Rongtai Health has no effect on the direction of China Eastern i.e., China Eastern and Shanghai Rongtai go up and down completely randomly.
Pair Corralation between China Eastern and Shanghai Rongtai
Assuming the 90 days trading horizon China Eastern Airlines is expected to generate 0.89 times more return on investment than Shanghai Rongtai. However, China Eastern Airlines is 1.13 times less risky than Shanghai Rongtai. It trades about -0.13 of its potential returns per unit of risk. Shanghai Rongtai Health is currently generating about -0.24 per unit of risk. If you would invest 411.00 in China Eastern Airlines on October 18, 2024 and sell it today you would lose (21.00) from holding China Eastern Airlines or give up 5.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Eastern Airlines vs. Shanghai Rongtai Health
Performance |
| Timeline |
| China Eastern Airlines |
| Shanghai Rongtai Health |
China Eastern and Shanghai Rongtai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and Shanghai Rongtai
The main advantage of trading using opposite China Eastern and Shanghai Rongtai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, Shanghai Rongtai 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 Shanghai Rongtai will offset losses from the drop in Shanghai Rongtai'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 |
| Shanghai Rongtai vs. Rising Nonferrous Metals | Shanghai Rongtai vs. China Eastern Airlines | Shanghai Rongtai vs. HUAQIN TECHNOLOGY LTD | Shanghai Rongtai vs. Xinjiang Baodi Mining |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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