Correlation Between Air China and Hubei Xingfa
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By analyzing existing cross correlation between Air China Ltd and Hubei Xingfa Chemicals, you can compare the effects of market volatilities on Air China and Hubei Xingfa 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 Hubei Xingfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air China and Hubei Xingfa.
Diversification Opportunities for Air China and Hubei Xingfa
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Air and Hubei is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Air China Ltd and Hubei Xingfa Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Xingfa Chemicals 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 Hubei Xingfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Xingfa Chemicals has no effect on the direction of Air China i.e., Air China and Hubei Xingfa go up and down completely randomly.
Pair Corralation between Air China and Hubei Xingfa
Assuming the 90 days trading horizon Air China Ltd is expected to under-perform the Hubei Xingfa. But the stock apears to be less risky and, when comparing its historical volatility, Air China Ltd is 1.22 times less risky than Hubei Xingfa. The stock trades about -0.03 of its potential returns per unit of risk. The Hubei Xingfa Chemicals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,027 in Hubei Xingfa Chemicals on October 11, 2024 and sell it today you would lose (905.00) from holding Hubei Xingfa Chemicals or give up 29.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Air China Ltd vs. Hubei Xingfa Chemicals
Performance |
Timeline |
Air China |
Hubei Xingfa Chemicals |
Air China and Hubei Xingfa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air China and Hubei Xingfa
The main advantage of trading using opposite Air China and Hubei Xingfa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air China position performs unexpectedly, Hubei Xingfa 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 Hubei Xingfa will offset losses from the drop in Hubei Xingfa's long position.Air China vs. Liuzhou Chemical Industry | Air China vs. Nanxing Furniture Machinery | Air China vs. Ningxia Younglight Chemicals | Air China vs. Hongrun Construction Group |
Hubei Xingfa vs. Air China Ltd | Hubei Xingfa vs. Beijing Mainstreets Investment | Hubei Xingfa vs. Zoy Home Furnishing | Hubei Xingfa vs. Kunwu Jiuding 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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