Correlation Between China Aircraft and DIAGEO
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By analyzing existing cross correlation between China Aircraft Leasing and DIAGEO CAPITAL PLC, you can compare the effects of market volatilities on China Aircraft and DIAGEO 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 DIAGEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and DIAGEO.
Diversification Opportunities for China Aircraft and DIAGEO
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and DIAGEO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and DIAGEO CAPITAL PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIAGEO CAPITAL PLC 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 DIAGEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIAGEO CAPITAL PLC has no effect on the direction of China Aircraft i.e., China Aircraft and DIAGEO go up and down completely randomly.
Pair Corralation between China Aircraft and DIAGEO
Assuming the 90 days horizon China Aircraft is expected to generate 17.86 times less return on investment than DIAGEO. But when comparing it to its historical volatility, China Aircraft Leasing is 19.42 times less risky than DIAGEO. It trades about 0.08 of its potential returns per unit of risk. DIAGEO CAPITAL PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,142 in DIAGEO CAPITAL PLC on August 31, 2024 and sell it today you would earn a total of 169.00 from holding DIAGEO CAPITAL PLC or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.07% |
| Values | Daily Returns |
China Aircraft Leasing vs. DIAGEO CAPITAL PLC
Performance |
| Timeline |
| China Aircraft Leasing |
| DIAGEO CAPITAL PLC |
China Aircraft and DIAGEO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Aircraft and DIAGEO
The main advantage of trading using opposite China Aircraft and DIAGEO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft position performs unexpectedly, DIAGEO 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 DIAGEO will offset losses from the drop in DIAGEO's long position.| China Aircraft vs. Skechers USA | China Aircraft vs. United Homes Group | China Aircraft vs. Procter Gamble | China Aircraft vs. Church Dwight |
| DIAGEO vs. CVW CleanTech | DIAGEO vs. Ironveld Plc | DIAGEO vs. Capital Clean Energy | DIAGEO vs. Sanyo Special Steel |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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