Correlation Between Analog Devices and China Aircraft
Can any of the company-specific risk be diversified away by investing in both Analog Devices and China Aircraft 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 Analog Devices and China Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and China Aircraft Leasing, you can compare the effects of market volatilities on Analog Devices and China Aircraft 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 Analog Devices with a short position of China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and China Aircraft.
Diversification Opportunities for Analog Devices and China Aircraft
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Analog and China is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing and Analog Devices 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 Analog Devices are associated (or correlated) with China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of Analog Devices i.e., Analog Devices and China Aircraft go up and down completely randomly.
Pair Corralation between Analog Devices and China Aircraft
Considering the 90-day investment horizon Analog Devices is expected to generate 3.86 times less return on investment than China Aircraft. But when comparing it to its historical volatility, Analog Devices is 2.07 times less risky than China Aircraft. It trades about 0.04 of its potential returns per unit of risk. China Aircraft Leasing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13.00 in China Aircraft Leasing on August 30, 2024 and sell it today you would earn a total of 27.00 from holding China Aircraft Leasing or generate 207.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. China Aircraft Leasing
Performance |
| Timeline |
| Analog Devices |
| China Aircraft Leasing |
Analog Devices and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and China Aircraft
The main advantage of trading using opposite Analog Devices and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, China Aircraft 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 Aircraft will offset losses from the drop in China Aircraft's long position.| Analog Devices vs. ABIVAX Socit Anonyme | Analog Devices vs. Morningstar Unconstrained Allocation | Analog Devices vs. SPACE | Analog Devices vs. Knife River |
| China Aircraft vs. Yuexiu Transport Infrastructure | China Aircraft vs. Ihuman Inc | China Aircraft vs. One Liberty Properties | China Aircraft vs. Hafnia Limited |
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.
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