Correlation Between GOODTECH ASA and China Southern
Can any of the company-specific risk be diversified away by investing in both GOODTECH ASA and China Southern at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GOODTECH ASA and China Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODTECH ASA A and China Southern Airlines, you can compare the effects of market volatilities on GOODTECH ASA and China Southern 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 GOODTECH ASA with a short position of China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODTECH ASA and China Southern.
Diversification Opportunities for GOODTECH ASA and China Southern
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GOODTECH and China is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GOODTECH ASA A and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines and GOODTECH ASA 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 GOODTECH ASA A are associated (or correlated) with China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of GOODTECH ASA i.e., GOODTECH ASA and China Southern go up and down completely randomly.
Pair Corralation between GOODTECH ASA and China Southern
Assuming the 90 days horizon GOODTECH ASA A is expected to generate 0.9 times more return on investment than China Southern. However, GOODTECH ASA A is 1.11 times less risky than China Southern. It trades about 0.03 of its potential returns per unit of risk. China Southern Airlines is currently generating about -0.01 per unit of risk. If you would invest 74.00 in GOODTECH ASA A on October 20, 2024 and sell it today you would earn a total of 13.00 from holding GOODTECH ASA A or generate 17.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
GOODTECH ASA A vs. China Southern Airlines
Performance |
Timeline |
GOODTECH ASA A |
China Southern Airlines |
GOODTECH ASA and China Southern Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GOODTECH ASA and China Southern
The main advantage of trading using opposite GOODTECH ASA and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODTECH ASA position performs unexpectedly, China Southern 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 Southern will offset losses from the drop in China Southern's long position.GOODTECH ASA vs. Vinci S A | GOODTECH ASA vs. Johnson Controls International | GOODTECH ASA vs. Larsen Toubro Limited | GOODTECH ASA vs. China Railway Group |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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