Correlation Between Alaska Air and CITIC Telecom
Can any of the company-specific risk be diversified away by investing in both Alaska Air and CITIC Telecom 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 Alaska Air and CITIC Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Air Group and CITIC Telecom International, you can compare the effects of market volatilities on Alaska Air and CITIC Telecom 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 Alaska Air with a short position of CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and CITIC Telecom.
Diversification Opportunities for Alaska Air and CITIC Telecom
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alaska and CITIC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern and Alaska Air 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 Alaska Air Group are associated (or correlated) with CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of Alaska Air i.e., Alaska Air and CITIC Telecom go up and down completely randomly.
Pair Corralation between Alaska Air and CITIC Telecom
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 0.55 times more return on investment than CITIC Telecom. However, Alaska Air Group is 1.81 times less risky than CITIC Telecom. It trades about 0.33 of its potential returns per unit of risk. CITIC Telecom International is currently generating about -0.04 per unit of risk. If you would invest 6,278 in Alaska Air Group on November 3, 2024 and sell it today you would earn a total of 784.00 from holding Alaska Air Group or generate 12.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. CITIC Telecom International
Performance |
| Timeline |
| Alaska Air Group |
| CITIC Telecom Intern |
Alaska Air and CITIC Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and CITIC Telecom
The main advantage of trading using opposite Alaska Air and CITIC Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, CITIC Telecom 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 CITIC Telecom will offset losses from the drop in CITIC Telecom's long position.| Alaska Air vs. MCEWEN MINING INC | Alaska Air vs. Elmos Semiconductor SE | Alaska Air vs. Eurasia Mining Plc | Alaska Air vs. De Grey Mining |
| CITIC Telecom vs. EIDESVIK OFFSHORE NK | CITIC Telecom vs. BW OFFSHORE LTD | CITIC Telecom vs. ANGLO ASIAN MINING | CITIC Telecom vs. INSURANCE AUST GRP |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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