Correlation Between Guangzhou Automobile and Hainan Airlines
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By analyzing existing cross correlation between Guangzhou Automobile Group and Hainan Airlines Co, you can compare the effects of market volatilities on Guangzhou Automobile and Hainan Airlines 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 Guangzhou Automobile with a short position of Hainan Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and Hainan Airlines.
Diversification Opportunities for Guangzhou Automobile and Hainan Airlines
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangzhou and Hainan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and Hainan Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Airlines and Guangzhou Automobile 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 Guangzhou Automobile Group are associated (or correlated) with Hainan Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Airlines has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and Hainan Airlines go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and Hainan Airlines
Assuming the 90 days trading horizon Guangzhou Automobile is expected to generate 5.28 times less return on investment than Hainan Airlines. But when comparing it to its historical volatility, Guangzhou Automobile Group is 1.78 times less risky than Hainan Airlines. It trades about 0.08 of its potential returns per unit of risk. Hainan Airlines Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Hainan Airlines Co on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Hainan Airlines Co or generate 21.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Automobile Group vs. Hainan Airlines Co
Performance |
| Timeline |
| Guangzhou Automobile |
| Hainan Airlines |
Guangzhou Automobile and Hainan Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and Hainan Airlines
The main advantage of trading using opposite Guangzhou Automobile and Hainan Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile position performs unexpectedly, Hainan Airlines 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 Hainan Airlines will offset losses from the drop in Hainan Airlines' long position.| Guangzhou Automobile vs. Lutian Machinery Co | Guangzhou Automobile vs. China Longyuan Power | Guangzhou Automobile vs. Changshu Tongrun Auto | Guangzhou Automobile vs. PetroChina Co Ltd |
| Hainan Airlines vs. AVCON Information Tech | Hainan Airlines vs. Guangzhou Ruoyuchen Information | Hainan Airlines vs. Tongding Interconnection Information | Hainan Airlines vs. Focus Media Information |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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