Correlation Between China Eastern and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both China Eastern and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS, you can compare the effects of market volatilities on China Eastern and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and AIR PRODCHEMICALS.
Diversification Opportunities for China Eastern and AIR PRODCHEMICALS
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and AIR is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of China Eastern i.e., China Eastern and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between China Eastern and AIR PRODCHEMICALS
Assuming the 90 days trading horizon China Eastern is expected to generate 2.3 times less return on investment than AIR PRODCHEMICALS. In addition to that, China Eastern is 2.45 times more volatile than AIR PRODCHEMICALS. It trades about 0.07 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.41 per unit of volatility. If you would invest 28,090 in AIR PRODCHEMICALS on October 24, 2024 and sell it today you would earn a total of 2,610 from holding AIR PRODCHEMICALS or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Eastern Airlines vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| China Eastern Airlines |
| AIR PRODCHEMICALS |
China Eastern and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and AIR PRODCHEMICALS
The main advantage of trading using opposite China Eastern and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| China Eastern vs. Guangdong Investment Limited | China Eastern vs. JLF INVESTMENT | China Eastern vs. WillScot Mobile Mini | China Eastern vs. Apollo Investment Corp |
| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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