Correlation Between China Aircraft and Solventum Corp
Can any of the company-specific risk be diversified away by investing in both China Aircraft and Solventum Corp 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 Solventum Corp 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 Solventum Corp, you can compare the effects of market volatilities on China Aircraft and Solventum Corp 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 Solventum Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and Solventum Corp.
Diversification Opportunities for China Aircraft and Solventum Corp
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Solventum is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Solventum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solventum Corp 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 Solventum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solventum Corp has no effect on the direction of China Aircraft i.e., China Aircraft and Solventum Corp go up and down completely randomly.
Pair Corralation between China Aircraft and Solventum Corp
Assuming the 90 days horizon China Aircraft Leasing is expected to generate 1.8 times more return on investment than Solventum Corp. However, China Aircraft is 1.8 times more volatile than Solventum Corp. It trades about 0.08 of its potential returns per unit of risk. Solventum Corp is currently generating about -0.03 per unit of risk. If you would invest 13.00 in China Aircraft Leasing on September 14, 2024 and sell it today you would earn a total of 27.00 from holding China Aircraft Leasing or generate 207.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 37.04% |
| Values | Daily Returns |
China Aircraft Leasing vs. Solventum Corp
Performance |
| Timeline |
| China Aircraft Leasing |
| Solventum Corp |
China Aircraft and Solventum Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Aircraft and Solventum Corp
The main advantage of trading using opposite China Aircraft and Solventum Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft position performs unexpectedly, Solventum Corp 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 Solventum Corp will offset losses from the drop in Solventum Corp's long position.| China Aircraft vs. JD Sports Fashion | China Aircraft vs. Highway Holdings Limited | China Aircraft vs. Planet Fitness | China Aircraft vs. Hasbro Inc |
| Solventum Corp vs. Scholastic | Solventum Corp vs. AMREP | Solventum Corp vs. Triton International Limited | Solventum Corp vs. China Aircraft Leasing |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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