Correlation Between AIR CHINA and RYANAIR HLDGS
Can any of the company-specific risk be diversified away by investing in both AIR CHINA and RYANAIR HLDGS 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 RYANAIR HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR CHINA LTD and RYANAIR HLDGS ADR, you can compare the effects of market volatilities on AIR CHINA and RYANAIR HLDGS 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 RYANAIR HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR CHINA and RYANAIR HLDGS.
Diversification Opportunities for AIR CHINA and RYANAIR HLDGS
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between AIR and RYANAIR is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding AIR CHINA LTD and RYANAIR HLDGS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RYANAIR HLDGS ADR 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 LTD are associated (or correlated) with RYANAIR HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RYANAIR HLDGS ADR has no effect on the direction of AIR CHINA i.e., AIR CHINA and RYANAIR HLDGS go up and down completely randomly.
Pair Corralation between AIR CHINA and RYANAIR HLDGS
Assuming the 90 days trading horizon AIR CHINA LTD is expected to generate 2.09 times more return on investment than RYANAIR HLDGS. However, AIR CHINA is 2.09 times more volatile than RYANAIR HLDGS ADR. It trades about 0.34 of its potential returns per unit of risk. RYANAIR HLDGS ADR is currently generating about -0.11 per unit of risk. If you would invest 960.00 in AIR CHINA LTD on August 28, 2024 and sell it today you would earn a total of 190.00 from holding AIR CHINA LTD or generate 19.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR CHINA LTD vs. RYANAIR HLDGS ADR
Performance |
| Timeline |
| AIR CHINA LTD |
| RYANAIR HLDGS ADR |
AIR CHINA and RYANAIR HLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR CHINA and RYANAIR HLDGS
The main advantage of trading using opposite AIR CHINA and RYANAIR HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR CHINA position performs unexpectedly, RYANAIR HLDGS 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 RYANAIR HLDGS will offset losses from the drop in RYANAIR HLDGS's long position.The idea behind AIR CHINA LTD and RYANAIR HLDGS ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |