Correlation Between Industrial and Hainan Airlines
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By analyzing existing cross correlation between Industrial and Commercial and Hainan Airlines Co, you can compare the effects of market volatilities on Industrial 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 Industrial with a short position of Hainan Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial and Hainan Airlines.
Diversification Opportunities for Industrial and Hainan Airlines
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Industrial and Hainan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Hainan Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Airlines and Industrial 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 Industrial and Commercial 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 Industrial i.e., Industrial and Hainan Airlines go up and down completely randomly.
Pair Corralation between Industrial and Hainan Airlines
Assuming the 90 days trading horizon Industrial is expected to generate 1.65 times less return on investment than Hainan Airlines. But when comparing it to its historical volatility, Industrial and Commercial is 2.86 times less risky than Hainan Airlines. It trades about 0.1 of its potential returns per unit of risk. Hainan Airlines Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Hainan Airlines Co on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Hainan Airlines Co or generate 52.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.68% |
| Values | Daily Returns |
Industrial and Commercial vs. Hainan Airlines Co
Performance |
| Timeline |
| Industrial and Commercial |
| Hainan Airlines |
Industrial and Hainan Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial and Hainan Airlines
The main advantage of trading using opposite Industrial and Hainan Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial 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.| Industrial vs. Eastroc Beverage Group | Industrial vs. China Publishing Media | Industrial vs. Inly Media Co | Industrial vs. Beijing Sanyuan Foods |
| Hainan Airlines vs. Agricultural Bank of | Hainan Airlines vs. Industrial and Commercial | Hainan Airlines vs. Bank of China | Hainan Airlines vs. PetroChina Co Ltd |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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