Correlation Between China State and Air China
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By analyzing existing cross correlation between China State Construction and Air China Ltd, you can compare the effects of market volatilities on China State and Air China 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 China State with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Air China.
Diversification Opportunities for China State and Air China
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Air is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Air China Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China and China State 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 China State Construction are associated (or correlated) with Air China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air China has no effect on the direction of China State i.e., China State and Air China go up and down completely randomly.
Pair Corralation between China State and Air China
Assuming the 90 days trading horizon China State is expected to generate 50.69 times less return on investment than Air China. But when comparing it to its historical volatility, China State Construction is 1.53 times less risky than Air China. It trades about 0.01 of its potential returns per unit of risk. Air China Ltd is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 743.00 in Air China Ltd on September 14, 2024 and sell it today you would earn a total of 136.00 from holding Air China Ltd or generate 18.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. Air China Ltd
Performance |
| Timeline |
| China State Construction |
| Air China |
China State and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Air China
The main advantage of trading using opposite China State and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, Air China 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 Air China will offset losses from the drop in Air China's long position.| China State vs. Ming Yang Smart | China State vs. 159681 | China State vs. 159005 | China State vs. Loctek Ergonomic Technology |
| Air China vs. China State Construction | Air China vs. Poly Real Estate | Air China vs. China Vanke Co | Air China vs. China Merchants Shekou |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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