Correlation Between China Southern and Nok Airlines
Can any of the company-specific risk be diversified away by investing in both China Southern and Nok Airlines 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 Southern and Nok Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Southern Airlines and Nok Airlines Public, you can compare the effects of market volatilities on China Southern and Nok Airlines 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 Southern with a short position of Nok Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Southern and Nok Airlines.
Diversification Opportunities for China Southern and Nok Airlines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Nok is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Southern Airlines and Nok Airlines Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nok Airlines Public and China Southern 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 Southern Airlines are associated (or correlated) with Nok Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nok Airlines Public has no effect on the direction of China Southern i.e., China Southern and Nok Airlines go up and down completely randomly.
Pair Corralation between China Southern and Nok Airlines
If you would invest 47.00 in China Southern Airlines on August 27, 2024 and sell it today you would lose (1.00) from holding China Southern Airlines or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Southern Airlines vs. Nok Airlines Public
Performance |
| Timeline |
| China Southern Airlines |
| Nok Airlines Public |
China Southern and Nok Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Southern and Nok Airlines
The main advantage of trading using opposite China Southern and Nok Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Southern position performs unexpectedly, Nok Airlines 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 Nok Airlines will offset losses from the drop in Nok Airlines' long position.The idea behind China Southern Airlines and Nok Airlines Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nok Airlines vs. Luxfer Holdings PLC | Nok Airlines vs. X FAB Silicon Foundries | Nok Airlines vs. Air Transport Services | Nok Airlines vs. Ziff Davis |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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