Correlation Between Northern United and China Eastern
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By analyzing existing cross correlation between Northern United Publishing and China Eastern Airlines, you can compare the effects of market volatilities on Northern United and China Eastern 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 Northern United with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern United and China Eastern.
Diversification Opportunities for Northern United and China Eastern
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and China is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Northern United Publishing and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and Northern United 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 Northern United Publishing are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Northern United i.e., Northern United and China Eastern go up and down completely randomly.
Pair Corralation between Northern United and China Eastern
Assuming the 90 days trading horizon Northern United Publishing is expected to generate 2.08 times more return on investment than China Eastern. However, Northern United is 2.08 times more volatile than China Eastern Airlines. It trades about 0.02 of its potential returns per unit of risk. China Eastern Airlines is currently generating about -0.04 per unit of risk. If you would invest 670.00 in Northern United Publishing on November 9, 2024 and sell it today you would lose (2.00) from holding Northern United Publishing or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern United Publishing vs. China Eastern Airlines
Performance |
| Timeline |
| Northern United Publ |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| China Eastern Airlines |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Northern United and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern United and China Eastern
The main advantage of trading using opposite Northern United and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern United position performs unexpectedly, China Eastern 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 China Eastern will offset losses from the drop in China Eastern's long position.The idea behind Northern United Publishing and China Eastern Airlines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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