Correlation Between Airbus SE and China Pacific
Can any of the company-specific risk be diversified away by investing in both Airbus SE and China Pacific 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 Airbus SE and China Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airbus SE and China Pacific Insurance, you can compare the effects of market volatilities on Airbus SE and China Pacific 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 Airbus SE with a short position of China Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus SE and China Pacific.
Diversification Opportunities for Airbus SE and China Pacific
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Airbus and China is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Airbus SE and China Pacific Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pacific Insurance and Airbus SE 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 Airbus SE are associated (or correlated) with China Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pacific Insurance has no effect on the direction of Airbus SE i.e., Airbus SE and China Pacific go up and down completely randomly.
Pair Corralation between Airbus SE and China Pacific
Assuming the 90 days trading horizon Airbus SE is expected to generate 0.4 times more return on investment than China Pacific. However, Airbus SE is 2.53 times less risky than China Pacific. It trades about 0.24 of its potential returns per unit of risk. China Pacific Insurance is currently generating about -0.05 per unit of risk. If you would invest 15,918 in Airbus SE on November 2, 2024 and sell it today you would earn a total of 744.00 from holding Airbus SE or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airbus SE vs. China Pacific Insurance
Performance |
| Timeline |
| Airbus SE |
| China Pacific Insurance |
Airbus SE and China Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airbus SE and China Pacific
The main advantage of trading using opposite Airbus SE and China Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus SE position performs unexpectedly, China Pacific 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 Pacific will offset losses from the drop in China Pacific's long position.| Airbus SE vs. Dairy Farm International | Airbus SE vs. FARM 51 GROUP | Airbus SE vs. SOFI TECHNOLOGIES | Airbus SE vs. North American Construction |
| China Pacific vs. Check Point Software | China Pacific vs. Ribbon Communications | China Pacific vs. Computershare Limited | China Pacific vs. Charter Communications |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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