Correlation Between China Aircraft and Old Dominion
Can any of the company-specific risk be diversified away by investing in both China Aircraft and Old Dominion 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 Old Dominion 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 Old Dominion Freight, you can compare the effects of market volatilities on China Aircraft and Old Dominion 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 Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and Old Dominion.
Diversification Opportunities for China Aircraft and Old Dominion
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Old is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight 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 Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of China Aircraft i.e., China Aircraft and Old Dominion go up and down completely randomly.
Pair Corralation between China Aircraft and Old Dominion
Assuming the 90 days horizon China Aircraft Leasing is expected to generate 2.09 times more return on investment than Old Dominion. However, China Aircraft is 2.09 times more volatile than Old Dominion Freight. It trades about 0.07 of its potential returns per unit of risk. Old Dominion Freight is currently generating about 0.02 per unit of risk. If you would invest 19.00 in China Aircraft Leasing on August 26, 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. Old Dominion Freight
Performance |
| Timeline |
| China Aircraft Leasing |
| Old Dominion Freight |
China Aircraft and Old Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Aircraft and Old Dominion
The main advantage of trading using opposite China Aircraft and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft position performs unexpectedly, Old Dominion 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 Old Dominion will offset losses from the drop in Old Dominion's long position.| China Aircraft vs. Patterson UTI Energy | China Aircraft vs. BioNTech SE | China Aircraft vs. Helmerich and Payne | China Aircraft vs. Sellas Life Sciences |
| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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