Correlation Between Air New and Wenzhou Kangning
Can any of the company-specific risk be diversified away by investing in both Air New and Wenzhou Kangning 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 Air New and Wenzhou Kangning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Wenzhou Kangning Hospital, you can compare the effects of market volatilities on Air New and Wenzhou Kangning 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 Air New with a short position of Wenzhou Kangning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Wenzhou Kangning.
Diversification Opportunities for Air New and Wenzhou Kangning
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Air and Wenzhou is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Wenzhou Kangning Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Kangning Hospital and Air New 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 Air New Zealand are associated (or correlated) with Wenzhou Kangning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Kangning Hospital has no effect on the direction of Air New i.e., Air New and Wenzhou Kangning go up and down completely randomly.
Pair Corralation between Air New and Wenzhou Kangning
Assuming the 90 days trading horizon Air New Zealand is expected to generate 1.66 times more return on investment than Wenzhou Kangning. However, Air New is 1.66 times more volatile than Wenzhou Kangning Hospital. It trades about 0.07 of its potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about -0.25 per unit of risk. If you would invest 31.00 in Air New Zealand on October 15, 2024 and sell it today you would earn a total of 1.00 from holding Air New Zealand or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Wenzhou Kangning Hospital
Performance |
| Timeline |
| Air New Zealand |
| Wenzhou Kangning Hospital |
Air New and Wenzhou Kangning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Wenzhou Kangning
The main advantage of trading using opposite Air New and Wenzhou Kangning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Wenzhou Kangning 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 Wenzhou Kangning will offset losses from the drop in Wenzhou Kangning's long position.| Air New vs. Molina Healthcare | Air New vs. OPKO HEALTH | Air New vs. PURETECH HEALTH PLC | Air New vs. CARSALESCOM |
| Wenzhou Kangning vs. Pentair plc | Wenzhou Kangning vs. Molina Healthcare | Wenzhou Kangning vs. Air New Zealand | Wenzhou Kangning vs. MYFAIR GOLD P |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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