Correlation Between China Resources and Alaska Air
Can any of the company-specific risk be diversified away by investing in both China Resources and Alaska Air 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 Resources and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Alaska Air Group, you can compare the effects of market volatilities on China Resources and Alaska Air 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 Resources with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Alaska Air.
Diversification Opportunities for China Resources and Alaska Air
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Alaska is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group and China Resources 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 Resources Beer are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of China Resources i.e., China Resources and Alaska Air go up and down completely randomly.
Pair Corralation between China Resources and Alaska Air
Assuming the 90 days horizon China Resources is expected to generate 2.36 times less return on investment than Alaska Air. In addition to that, China Resources is 1.56 times more volatile than Alaska Air Group. It trades about 0.03 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.1 per unit of volatility. If you would invest 3,588 in Alaska Air Group on September 20, 2024 and sell it today you would earn a total of 2,426 from holding Alaska Air Group or generate 67.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Alaska Air Group
Performance |
| Timeline |
| China Resources Beer |
| Alaska Air Group |
China Resources and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Alaska Air
The main advantage of trading using opposite China Resources and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| China Resources vs. Ribbon Communications | China Resources vs. SUN ART RETAIL | China Resources vs. SK TELECOM TDADR | China Resources vs. SIDETRADE EO 1 |
| Alaska Air vs. BOSTON BEER A | Alaska Air vs. China Resources Beer | Alaska Air vs. Fevertree Drinks PLC | Alaska Air vs. The Boston Beer |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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