Correlation Between Air China and Shenyang Chemical
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By analyzing existing cross correlation between Air China Ltd and Shenyang Chemical Industry, you can compare the effects of market volatilities on Air China and Shenyang 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 Air China with a short position of Shenyang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air China and Shenyang Chemical.
Diversification Opportunities for Air China and Shenyang Chemical
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Shenyang is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Air China Ltd and Shenyang Chemical Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyang Chemical 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 Shenyang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyang Chemical has no effect on the direction of Air China i.e., Air China and Shenyang Chemical go up and down completely randomly.
Pair Corralation between Air China and Shenyang Chemical
Assuming the 90 days trading horizon Air China Ltd is expected to generate 0.67 times more return on investment than Shenyang Chemical. However, Air China Ltd is 1.49 times less risky than Shenyang Chemical. It trades about -0.03 of its potential returns per unit of risk. Shenyang Chemical Industry is currently generating about -0.02 per unit of risk. If you would invest 1,039 in Air China Ltd on October 16, 2024 and sell it today you would lose (311.00) from holding Air China Ltd or give up 29.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air China Ltd vs. Shenyang Chemical Industry
Performance |
| Timeline |
| Air China |
| Shenyang Chemical |
Air China and Shenyang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air China and Shenyang Chemical
The main advantage of trading using opposite Air China and Shenyang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air China position performs unexpectedly, Shenyang 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 Shenyang Chemical will offset losses from the drop in Shenyang Chemical's long position.| Air China vs. Huasi Agricultural Development | Air China vs. Fiberhome Telecommunication Technologies | Air China vs. Weichai Heavy Machinery | Air China vs. Nanxing Furniture Machinery |
| Shenyang Chemical vs. Luyin Investment Group | Shenyang Chemical vs. Chengdu Xingrong Investment | Shenyang Chemical vs. Nuode Investment Co | Shenyang Chemical vs. Western Metal Materials |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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