Correlation Between Air China and China Longyuan
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By analyzing existing cross correlation between Air China Ltd and China Longyuan Power, you can compare the effects of market volatilities on Air China and China Longyuan 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 China Longyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air China and China Longyuan.
Diversification Opportunities for Air China and China Longyuan
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and China is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Air China Ltd and China Longyuan Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Longyuan Power 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 China Longyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Longyuan Power has no effect on the direction of Air China i.e., Air China and China Longyuan go up and down completely randomly.
Pair Corralation between Air China and China Longyuan
Assuming the 90 days trading horizon Air China Ltd is expected to generate 0.56 times more return on investment than China Longyuan. However, Air China Ltd is 1.77 times less risky than China Longyuan. It trades about 0.28 of its potential returns per unit of risk. China Longyuan Power is currently generating about -0.07 per unit of risk. If you would invest 722.00 in Air China Ltd on August 29, 2024 and sell it today you would earn a total of 72.00 from holding Air China Ltd or generate 9.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Air China Ltd vs. China Longyuan Power
Performance |
Timeline |
Air China |
China Longyuan Power |
Air China and China Longyuan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air China and China Longyuan
The main advantage of trading using opposite Air China and China Longyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air China position performs unexpectedly, China Longyuan 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 China Longyuan will offset losses from the drop in China Longyuan's long position.Air China vs. BYD Co Ltd | Air China vs. China Mobile Limited | Air China vs. Agricultural Bank of | Air China vs. Industrial and Commercial |
China Longyuan vs. Sinomach General Machinery | China Longyuan vs. Zijin Mining Group | China Longyuan vs. Zhongshan Public Utilities | China Longyuan vs. Shenzhen Zhongzhuang Construction |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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