Correlation Between Air China and Wienerberger
Can any of the company-specific risk be diversified away by investing in both Air China and Wienerberger 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 Wienerberger 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 Wienerberger AG, you can compare the effects of market volatilities on Air China and Wienerberger 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 Wienerberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air China and Wienerberger.
Diversification Opportunities for Air China and Wienerberger
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Wienerberger is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Air China Limited and Wienerberger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wienerberger AG 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 Wienerberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wienerberger AG has no effect on the direction of Air China i.e., Air China and Wienerberger go up and down completely randomly.
Pair Corralation between Air China and Wienerberger
Assuming the 90 days horizon Air China Limited is expected to generate 2.75 times more return on investment than Wienerberger. However, Air China is 2.75 times more volatile than Wienerberger AG. It trades about 0.1 of its potential returns per unit of risk. Wienerberger AG is currently generating about -0.15 per unit of risk. If you would invest 52.00 in Air China Limited on August 30, 2024 and sell it today you would earn a total of 8.00 from holding Air China Limited or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air China Limited vs. Wienerberger AG
Performance |
| Timeline |
| Air China Limited |
| Wienerberger AG |
Air China and Wienerberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air China and Wienerberger
The main advantage of trading using opposite Air China and Wienerberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air China position performs unexpectedly, Wienerberger 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 Wienerberger will offset losses from the drop in Wienerberger's long position.| Air China vs. Ryanair Holdings plc | Air China vs. Superior Plus Corp | Air China vs. NMI Holdings | Air China vs. Origin Agritech |
| Wienerberger vs. PROSIEBENSAT1 MEDIADR4 | Wienerberger vs. Beijing Media | Wienerberger vs. THAI BEVERAGE | Wienerberger vs. Thai Beverage Public |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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