Correlation Between Bank of China and Hainan Airlines
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By analyzing existing cross correlation between Bank of China and Hainan Airlines Co, you can compare the effects of market volatilities on Bank of China 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 Bank of China with a short position of Hainan Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Hainan Airlines.
Diversification Opportunities for Bank of China and Hainan Airlines
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Hainan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Hainan Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Airlines and Bank of 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 Bank of China 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 Bank of China i.e., Bank of China and Hainan Airlines go up and down completely randomly.
Pair Corralation between Bank of China and Hainan Airlines
Assuming the 90 days trading horizon Bank of China is expected to generate 2.98 times less return on investment than Hainan Airlines. But when comparing it to its historical volatility, Bank of China is 2.74 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 0.08 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Hainan Airlines Co on November 3, 2024 and sell it today you would earn a total of 14.00 from holding Hainan Airlines Co or generate 77.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. Hainan Airlines Co
Performance |
| Timeline |
| Bank of China |
| Hainan Airlines |
Bank of China and Hainan Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Hainan Airlines
The main advantage of trading using opposite Bank of China and Hainan Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China 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.| Bank of China vs. Zoje Resources Investment | Bank of China vs. Chengdu Xingrong Investment | Bank of China vs. Zbit Semiconductor A | Bank of China vs. Southchip Semiconductor Technology |
| Hainan Airlines vs. Guangzhou Seagull Kitchen | Hainan Airlines vs. Changzhou Evergreen Technology | Hainan Airlines vs. Linktel Technologies Co | Hainan Airlines vs. Sinofibers Technology 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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