Correlation Between China Resources and Air Lease
Can any of the company-specific risk be diversified away by investing in both China Resources and Air Lease 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 Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Power and Air Lease, you can compare the effects of market volatilities on China Resources and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Air Lease.
Diversification Opportunities for China Resources and Air Lease
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Air is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Power and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Power are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of China Resources i.e., China Resources and Air Lease go up and down completely randomly.
Pair Corralation between China Resources and Air Lease
Assuming the 90 days horizon China Resources Power is expected to generate 1.81 times more return on investment than Air Lease. However, China Resources is 1.81 times more volatile than Air Lease. It trades about 0.09 of its potential returns per unit of risk. Air Lease is currently generating about 0.02 per unit of risk. If you would invest 60.00 in China Resources Power on October 14, 2024 and sell it today you would earn a total of 146.00 from holding China Resources Power or generate 243.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Power vs. Air Lease
Performance |
| Timeline |
| China Resources Power |
| Air Lease |
China Resources and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Air Lease
The main advantage of trading using opposite China Resources and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Air Lease 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 Lease will offset losses from the drop in Air Lease's long position.| China Resources vs. Power Assets Holdings | China Resources vs. Superior Plus Corp | China Resources vs. NMI Holdings | China Resources vs. SIVERS SEMICONDUCTORS AB |
| Air Lease vs. Entravision Communications | Air Lease vs. EAT WELL INVESTMENT | Air Lease vs. Rocket Internet SE | Air Lease vs. COMPUTERSHARE |
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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