Correlation Between Gome Telecom and Spring Airlines
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By analyzing existing cross correlation between Gome Telecom Equipment and Spring Airlines Co, you can compare the effects of market volatilities on Gome Telecom 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 Gome Telecom with a short position of Spring Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gome Telecom and Spring Airlines.
Diversification Opportunities for Gome Telecom and Spring Airlines
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gome and Spring is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gome Telecom Equipment and Spring Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Airlines and Gome Telecom 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 Gome Telecom Equipment 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 Gome Telecom i.e., Gome Telecom and Spring Airlines go up and down completely randomly.
Pair Corralation between Gome Telecom and Spring Airlines
Assuming the 90 days trading horizon Gome Telecom Equipment is expected to under-perform the Spring Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Gome Telecom Equipment is 1.18 times less risky than Spring Airlines. The stock trades about -0.37 of its potential returns per unit of risk. The Spring Airlines Co is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 5,605 in Spring Airlines Co on November 9, 2024 and sell it today you would lose (414.00) from holding Spring Airlines Co or give up 7.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gome Telecom Equipment vs. Spring Airlines Co
Performance |
| Timeline |
| Gome Telecom Equipment |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Spring Airlines |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Gome Telecom and Spring Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gome Telecom and Spring Airlines
The main advantage of trading using opposite Gome Telecom and Spring Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gome Telecom 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 Gome Telecom Equipment 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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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