Correlation Between China Eastern and TRAVEL +
Can any of the company-specific risk be diversified away by investing in both China Eastern and TRAVEL + 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 TRAVEL + 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 TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on China Eastern and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and TRAVEL +.
Diversification Opportunities for China Eastern and TRAVEL +
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and TRAVEL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of China Eastern i.e., China Eastern and TRAVEL + go up and down completely randomly.
Pair Corralation between China Eastern and TRAVEL +
Assuming the 90 days trading horizon China Eastern is expected to generate 7.16 times less return on investment than TRAVEL +. In addition to that, China Eastern is 1.98 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.01 of its total potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.19 per unit of volatility. If you would invest 4,880 in TRAVEL LEISURE DL 01 on November 3, 2024 and sell it today you would earn a total of 320.00 from holding TRAVEL LEISURE DL 01 or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Eastern Airlines vs. TRAVEL LEISURE DL 01
Performance |
| Timeline |
| China Eastern Airlines |
| TRAVEL LEISURE DL |
China Eastern and TRAVEL + Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and TRAVEL +
The main advantage of trading using opposite China Eastern and TRAVEL + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, TRAVEL + 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 TRAVEL + will offset losses from the drop in TRAVEL +'s long position.| China Eastern vs. SPARTAN STORES | China Eastern vs. UNIVERSAL MUSIC GROUP | China Eastern vs. Marie Brizard Wine | China Eastern vs. NAKED WINES PLC |
| TRAVEL + vs. CITY OFFICE REIT | TRAVEL + vs. KOBE STEEL LTD | TRAVEL + vs. Pentair plc | TRAVEL + vs. Olympic 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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