Correlation Between Air China and Glodon Software
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By analyzing existing cross correlation between Air China Ltd and Glodon Software Co, you can compare the effects of market volatilities on Air China and Glodon Software 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 Glodon Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air China and Glodon Software.
Diversification Opportunities for Air China and Glodon Software
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Air and Glodon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Air China Ltd and Glodon Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glodon Software 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 Glodon Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glodon Software has no effect on the direction of Air China i.e., Air China and Glodon Software go up and down completely randomly.
Pair Corralation between Air China and Glodon Software
Assuming the 90 days trading horizon Air China is expected to generate 176.67 times less return on investment than Glodon Software. But when comparing it to its historical volatility, Air China Ltd is 1.92 times less risky than Glodon Software. It trades about 0.0 of its potential returns per unit of risk. Glodon Software Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,246 in Glodon Software Co on November 8, 2024 and sell it today you would lose (18.00) from holding Glodon Software Co or give up 1.44% 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. Glodon Software Co
Performance |
| Timeline |
| Air China |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Glodon Software |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Air China and Glodon Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air China and Glodon Software
The main advantage of trading using opposite Air China and Glodon Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air China position performs unexpectedly, Glodon Software 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 Glodon Software will offset losses from the drop in Glodon Software's long position.The idea behind Air China Ltd and Glodon Software 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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