Correlation Between American Express and AviChina Industry
Can any of the company-specific risk be diversified away by investing in both American Express and AviChina Industry 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 American Express and AviChina Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and AviChina Industry Technology, you can compare the effects of market volatilities on American Express and AviChina Industry 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 American Express with a short position of AviChina Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and AviChina Industry.
Diversification Opportunities for American Express and AviChina Industry
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and AviChina is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Express and AviChina Industry Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AviChina Industry and American Express 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 American Express are associated (or correlated) with AviChina Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AviChina Industry has no effect on the direction of American Express i.e., American Express and AviChina Industry go up and down completely randomly.
Pair Corralation between American Express and AviChina Industry
Considering the 90-day investment horizon American Express is expected to generate 0.64 times more return on investment than AviChina Industry. However, American Express is 1.56 times less risky than AviChina Industry. It trades about 0.3 of its potential returns per unit of risk. AviChina Industry Technology is currently generating about -0.22 per unit of risk. If you would invest 27,008 in American Express on September 1, 2024 and sell it today you would earn a total of 3,460 from holding American Express or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. AviChina Industry Technology
Performance |
| Timeline |
| American Express |
| AviChina Industry |
American Express and AviChina Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and AviChina Industry
The main advantage of trading using opposite American Express and AviChina Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, AviChina Industry 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 AviChina Industry will offset losses from the drop in AviChina Industry's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| AviChina Industry vs. Firan Technology Group | AviChina Industry vs. 808 Renewable Energy | AviChina Industry vs. Park Electrochemical | AviChina Industry vs. Innovative Solutions and |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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