Correlation Between American Airlines and China Health
Can any of the company-specific risk be diversified away by investing in both American Airlines and China Health 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 American Airlines and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and China Health Management, you can compare the effects of market volatilities on American Airlines and China Health 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 American Airlines with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and China Health.
Diversification Opportunities for American Airlines and China Health
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and China is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and China Health Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Management and American Airlines 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 American Airlines Group are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Management has no effect on the direction of American Airlines i.e., American Airlines and China Health go up and down completely randomly.
Pair Corralation between American Airlines and China Health
Considering the 90-day investment horizon American Airlines is expected to generate 2.64 times less return on investment than China Health. But when comparing it to its historical volatility, American Airlines Group is 4.48 times less risky than China Health. It trades about 0.07 of its potential returns per unit of risk. China Health Management is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.56 in China Health Management on October 21, 2024 and sell it today you would lose (0.22) from holding China Health Management or give up 39.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.31% |
| Values | Daily Returns |
American Airlines Group vs. China Health Management
Performance |
| Timeline |
| American Airlines |
| China Health Management |
American Airlines and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and China Health
The main advantage of trading using opposite American Airlines and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, China Health 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 Health will offset losses from the drop in China Health's long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. United Airlines Holdings |
| China Health vs. Absolute Health and | China Health vs. Embrace Change Acquisition | China Health vs. Supurva Healthcare Group | China Health vs. TransAKT |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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