Correlation Between China Construction and Air China
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By analyzing existing cross correlation between China Construction Bank and Air China Ltd, you can compare the effects of market volatilities on China Construction 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 Construction with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Air China.
Diversification Opportunities for China Construction and Air China
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Air is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank 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 Construction 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 Construction Bank 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 Construction i.e., China Construction and Air China go up and down completely randomly.
Pair Corralation between China Construction and Air China
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.7 times more return on investment than Air China. However, China Construction Bank is 1.42 times less risky than Air China. It trades about 0.08 of its potential returns per unit of risk. Air China Ltd is currently generating about -0.02 per unit of risk. If you would invest 519.00 in China Construction Bank on September 13, 2024 and sell it today you would earn a total of 302.00 from holding China Construction Bank or generate 58.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. Air China Ltd
Performance |
| Timeline |
| China Construction Bank |
| Air China |
China Construction and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Air China
The main advantage of trading using opposite China Construction and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction 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 Construction vs. Eastroc Beverage Group | China Construction vs. Youyou Foods Co | China Construction vs. HaiXin Foods Co | China Construction vs. Shanghai Metersbonwe FashionAccessories |
| Air China vs. Shanghai Action Education | Air China vs. Heilongjiang Publishing Media | Air China vs. Qtone Education Group | Air China vs. Southern PublishingMedia Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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