Correlation Between AAC TECHNOLOGHLDGADR and AIR CHINA
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and AIR CHINA 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 AAC TECHNOLOGHLDGADR and AIR CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and AIR CHINA LTD, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR with a short position of AIR CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and AIR CHINA.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and AIR CHINA
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AAC and AIR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and AIR CHINA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR CHINA LTD and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR 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 LTD has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and AIR CHINA go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and AIR CHINA
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.11 times more return on investment than AIR CHINA. However, AAC TECHNOLOGHLDGADR is 1.11 times more volatile than AIR CHINA LTD. It trades about 0.0 of its potential returns per unit of risk. AIR CHINA LTD is currently generating about -0.19 per unit of risk. If you would invest 460.00 in AAC TECHNOLOGHLDGADR on October 12, 2024 and sell it today you would lose (4.00) from holding AAC TECHNOLOGHLDGADR or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC TECHNOLOGHLDGADR vs. AIR CHINA LTD
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| AIR CHINA LTD |
AAC TECHNOLOGHLDGADR and AIR CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and AIR CHINA
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and AIR CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR 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.| AAC TECHNOLOGHLDGADR vs. GRIFFIN MINING LTD | AAC TECHNOLOGHLDGADR vs. Jacquet Metal Service | AAC TECHNOLOGHLDGADR vs. AIR PRODCHEMICALS | AAC TECHNOLOGHLDGADR vs. Calibre Mining Corp |
| AIR CHINA vs. Minerals Technologies | AIR CHINA vs. CNVISION MEDIA | AIR CHINA vs. AAC TECHNOLOGHLDGADR | AIR CHINA vs. Fuji Media Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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