Correlation Between China Eastern and Aluminum
Can any of the company-specific risk be diversified away by investing in both China Eastern and Aluminum 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 Eastern and Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Eastern Airlines and Aluminum of, you can compare the effects of market volatilities on China Eastern and Aluminum 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 Eastern with a short position of Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and Aluminum.
Diversification Opportunities for China Eastern and Aluminum
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Aluminum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum and China Eastern 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 Eastern Airlines are associated (or correlated) with Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum has no effect on the direction of China Eastern i.e., China Eastern and Aluminum go up and down completely randomly.
Pair Corralation between China Eastern and Aluminum
Assuming the 90 days trading horizon China Eastern is expected to generate 3.53 times less return on investment than Aluminum. In addition to that, China Eastern is 1.14 times more volatile than Aluminum of. It trades about 0.01 of its total potential returns per unit of risk. Aluminum of is currently generating about 0.06 per unit of volatility. If you would invest 31.00 in Aluminum of on October 28, 2024 and sell it today you would earn a total of 32.00 from holding Aluminum of or generate 103.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Eastern Airlines vs. Aluminum of
Performance |
| Timeline |
| China Eastern Airlines |
| Aluminum |
China Eastern and Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and Aluminum
The main advantage of trading using opposite China Eastern and Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, Aluminum 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 Aluminum will offset losses from the drop in Aluminum's long position.| China Eastern vs. Delta Air Lines | China Eastern vs. Air China Limited | China Eastern vs. AIR CHINA LTD | China Eastern vs. RYANAIR HLDGS ADR |
| Aluminum vs. ARDAGH METAL PACDL 0001 | Aluminum vs. SERI INDUSTRIAL EO | Aluminum vs. LOANDEPOT INC A | Aluminum vs. Global Ship Lease |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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