Correlation Between Air China and Nanhua Bio
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By analyzing existing cross correlation between Air China Ltd and Nanhua Bio Medicine, you can compare the effects of market volatilities on Air China and Nanhua Bio 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 Air China with a short position of Nanhua Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air China and Nanhua Bio.
Diversification Opportunities for Air China and Nanhua Bio
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and Nanhua is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Air China Ltd and Nanhua Bio Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanhua Bio Medicine and Air China 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 Air China Ltd are associated (or correlated) with Nanhua Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanhua Bio Medicine has no effect on the direction of Air China i.e., Air China and Nanhua Bio go up and down completely randomly.
Pair Corralation between Air China and Nanhua Bio
Assuming the 90 days trading horizon Air China Ltd is expected to generate 0.74 times more return on investment than Nanhua Bio. However, Air China Ltd is 1.34 times less risky than Nanhua Bio. It trades about -0.22 of its potential returns per unit of risk. Nanhua Bio Medicine is currently generating about -0.54 per unit of risk. If you would invest 847.00 in Air China Ltd on October 7, 2024 and sell it today you would lose (78.00) from holding Air China Ltd or give up 9.21% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Air China Ltd vs. Nanhua Bio Medicine
Performance |
Timeline |
Air China |
Nanhua Bio Medicine |
Air China and Nanhua Bio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air China and Nanhua Bio
The main advantage of trading using opposite Air China and Nanhua Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air China position performs unexpectedly, Nanhua Bio 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 Nanhua Bio will offset losses from the drop in Nanhua Bio's long position.Air China vs. BeiGene | Air China vs. G bits Network Technology | Air China vs. China Mobile Limited | Air China vs. Gansu Jiu Steel |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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