Correlation Between Air New and Hanison Construction
Can any of the company-specific risk be diversified away by investing in both Air New and Hanison Construction 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 Hanison Construction 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 Hanison Construction Holdings, you can compare the effects of market volatilities on Air New and Hanison Construction 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 Hanison Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Hanison Construction.
Diversification Opportunities for Air New and Hanison Construction
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Hanison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Hanison Construction Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanison Construction 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 Hanison Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanison Construction has no effect on the direction of Air New i.e., Air New and Hanison Construction go up and down completely randomly.
Pair Corralation between Air New and Hanison Construction
Assuming the 90 days trading horizon Air New Zealand is expected to under-perform the Hanison Construction. But the stock apears to be less risky and, when comparing its historical volatility, Air New Zealand is 1.61 times less risky than Hanison Construction. The stock trades about -0.01 of its potential returns per unit of risk. The Hanison Construction Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8.53 in Hanison Construction Holdings on August 31, 2024 and sell it today you would earn a total of 5.47 from holding Hanison Construction Holdings or generate 64.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Air New Zealand vs. Hanison Construction Holdings
Performance |
| Timeline |
| Air New Zealand |
| Hanison Construction |
Air New and Hanison Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Hanison Construction
The main advantage of trading using opposite Air New and Hanison Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Hanison Construction 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 Hanison Construction will offset losses from the drop in Hanison Construction's long position.| Air New vs. SIVERS SEMICONDUCTORS AB | Air New vs. Darden Restaurants | Air New vs. Reliance Steel Aluminum | Air New vs. Q2M Managementberatung AG |
| Hanison Construction vs. Larsen Toubro Limited | Hanison Construction vs. Superior Plus Corp | Hanison Construction vs. NMI Holdings | Hanison Construction vs. Origin Agritech |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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