Correlation Between China Aircraft and Edgewell Personal
Can any of the company-specific risk be diversified away by investing in both China Aircraft and Edgewell Personal 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 China Aircraft and Edgewell Personal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Aircraft Leasing and Edgewell Personal Care, you can compare the effects of market volatilities on China Aircraft and Edgewell Personal 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 China Aircraft with a short position of Edgewell Personal. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and Edgewell Personal.
Diversification Opportunities for China Aircraft and Edgewell Personal
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Edgewell is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care and China Aircraft 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 China Aircraft Leasing are associated (or correlated) with Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of China Aircraft i.e., China Aircraft and Edgewell Personal go up and down completely randomly.
Pair Corralation between China Aircraft and Edgewell Personal
Assuming the 90 days horizon China Aircraft Leasing is expected to generate 4.3 times more return on investment than Edgewell Personal. However, China Aircraft is 4.3 times more volatile than Edgewell Personal Care. It trades about 0.13 of its potential returns per unit of risk. Edgewell Personal Care is currently generating about -0.03 per unit of risk. If you would invest 19.00 in China Aircraft Leasing on September 2, 2024 and sell it today you would earn a total of 21.00 from holding China Aircraft Leasing or generate 110.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Aircraft Leasing vs. Edgewell Personal Care
Performance |
| Timeline |
| China Aircraft Leasing |
| Edgewell Personal Care |
China Aircraft and Edgewell Personal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Aircraft and Edgewell Personal
The main advantage of trading using opposite China Aircraft and Edgewell Personal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft position performs unexpectedly, Edgewell Personal 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 Edgewell Personal will offset losses from the drop in Edgewell Personal's long position.| China Aircraft vs. Ambev SA ADR | China Aircraft vs. Volaris | China Aircraft vs. Copa Holdings SA | China Aircraft vs. Molson Coors Brewing |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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