Correlation Between Air China and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Air China and TotalEnergies 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 Air China and TotalEnergies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air China Limited and TotalEnergies SE, you can compare the effects of market volatilities on Air China and TotalEnergies 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 Air China with a short position of TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air China and TotalEnergies.
Diversification Opportunities for Air China and TotalEnergies
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and TotalEnergies is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Air China Limited and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE and Air 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 Air China Limited are associated (or correlated) with TotalEnergies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TotalEnergies SE has no effect on the direction of Air China i.e., Air China and TotalEnergies go up and down completely randomly.
Pair Corralation between Air China and TotalEnergies
Assuming the 90 days horizon Air China Limited is expected to under-perform the TotalEnergies. In addition to that, Air China is 2.2 times more volatile than TotalEnergies SE. It trades about -0.06 of its total potential returns per unit of risk. TotalEnergies SE is currently generating about 0.14 per unit of volatility. If you would invest 5,550 in TotalEnergies SE on November 28, 2024 and sell it today you would earn a total of 250.00 from holding TotalEnergies SE or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Air China Limited vs. TotalEnergies SE
Performance |
| Timeline |
| Air China Limited |
| TotalEnergies SE |
Air China and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air China and TotalEnergies
The main advantage of trading using opposite Air China and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air China position performs unexpectedly, TotalEnergies 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 TotalEnergies will offset losses from the drop in TotalEnergies' long position.| Air China vs. Heidelberg Materials AG | Air China vs. Hyster Yale Materials Handling | Air China vs. Lamar Advertising | Air China vs. Vulcan Materials |
| TotalEnergies vs. SEKISUI CHEMICAL | TotalEnergies vs. SILICON LABORATOR | TotalEnergies vs. MICRONIC MYDATA | TotalEnergies vs. STORAGEVAULT CANADA INC |
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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