Correlation Between China Aircraft and Nasdaq
Can any of the company-specific risk be diversified away by investing in both China Aircraft and Nasdaq 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 Nasdaq 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 Nasdaq Inc, you can compare the effects of market volatilities on China Aircraft and Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and Nasdaq.
Diversification Opportunities for China Aircraft and Nasdaq
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Nasdaq is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of China Aircraft i.e., China Aircraft and Nasdaq go up and down completely randomly.
Pair Corralation between China Aircraft and Nasdaq
Assuming the 90 days horizon China Aircraft Leasing is expected to generate 4.89 times more return on investment than Nasdaq. However, China Aircraft is 4.89 times more volatile than Nasdaq Inc. It trades about 0.13 of its potential returns per unit of risk. Nasdaq Inc is currently generating about 0.24 per unit of risk. If you would invest 19.00 in China Aircraft Leasing on August 29, 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Aircraft Leasing vs. Nasdaq Inc
Performance |
| Timeline |
| China Aircraft Leasing |
| Nasdaq Inc |
China Aircraft and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Aircraft and Nasdaq
The main advantage of trading using opposite China Aircraft and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq's long position.| China Aircraft vs. Yuexiu Transport Infrastructure | China Aircraft vs. Ihuman Inc | China Aircraft vs. One Liberty Properties | China Aircraft vs. Hafnia Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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