Correlation Between Ebro Foods and Air China
Can any of the company-specific risk be diversified away by investing in both Ebro Foods 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 Ebro Foods and Air China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods SA and Air China Limited, you can compare the effects of market volatilities on Ebro Foods 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 Ebro Foods with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Air China.
Diversification Opportunities for Ebro Foods and Air China
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Air is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA 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 Ebro Foods 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 Ebro Foods SA 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 Ebro Foods i.e., Ebro Foods and Air China go up and down completely randomly.
Pair Corralation between Ebro Foods and Air China
Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.22 times more return on investment than Air China. However, Ebro Foods SA is 4.45 times less risky than Air China. It trades about -0.06 of its potential returns per unit of risk. Air China Limited is currently generating about -0.14 per unit of risk. If you would invest 1,588 in Ebro Foods SA on October 11, 2024 and sell it today you would lose (14.00) from holding Ebro Foods SA or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods SA vs. Air China Limited
Performance |
| Timeline |
| Ebro Foods SA |
| Air China Limited |
Ebro Foods and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Air China
The main advantage of trading using opposite Ebro Foods and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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.| Ebro Foods vs. ARDAGH METAL PACDL 0001 | Ebro Foods vs. GOODYEAR T RUBBER | Ebro Foods vs. Jacquet Metal Service | Ebro Foods vs. JD SPORTS FASH |
| Air China vs. INTERSHOP Communications Aktiengesellschaft | Air China vs. Ebro Foods SA | Air China vs. COMPUTERSHARE | Air China 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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