Correlation Between ANA Holdings and Air China
Can any of the company-specific risk be diversified away by investing in both ANA Holdings and Air China 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 ANA Holdings and Air China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANA Holdings ADR and Air China Limited, you can compare the effects of market volatilities on ANA Holdings and Air China 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 ANA Holdings with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANA Holdings and Air China.
Diversification Opportunities for ANA Holdings and Air China
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ANA and Air is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ANA Holdings ADR and Air China Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China Limited and ANA Holdings 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 ANA Holdings ADR are associated (or correlated) with Air China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air China Limited has no effect on the direction of ANA Holdings i.e., ANA Holdings and Air China go up and down completely randomly.
Pair Corralation between ANA Holdings and Air China
Assuming the 90 days horizon ANA Holdings ADR is expected to under-perform the Air China. In addition to that, ANA Holdings is 2.58 times more volatile than Air China Limited. It trades about -0.15 of its total potential returns per unit of risk. Air China Limited is currently generating about -0.23 per unit of volatility. If you would invest 65.00 in Air China Limited on October 20, 2024 and sell it today you would lose (2.00) from holding Air China Limited or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ANA Holdings ADR vs. Air China Limited
Performance |
| Timeline |
| ANA Holdings ADR |
| Air China Limited |
ANA Holdings and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANA Holdings and Air China
The main advantage of trading using opposite ANA Holdings and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANA Holdings position performs unexpectedly, Air China 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 Air China will offset losses from the drop in Air China's long position.| ANA Holdings vs. Cathay Pacific Airways | ANA Holdings vs. Air China Ltd | ANA Holdings vs. Ajinomoto Co ADR | ANA Holdings vs. Qantas Airways Ltd |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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