Correlation Between Canadian Utilities and AIR CHINA
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and AIR CHINA 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 Canadian Utilities and AIR CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and AIR CHINA LTD, you can compare the effects of market volatilities on Canadian Utilities and AIR CHINA 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 Canadian Utilities with a short position of AIR CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and AIR CHINA.
Diversification Opportunities for Canadian Utilities and AIR CHINA
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and AIR is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and AIR CHINA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR CHINA LTD and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with AIR CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR CHINA LTD has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and AIR CHINA go up and down completely randomly.
Pair Corralation between Canadian Utilities and AIR CHINA
Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the AIR CHINA. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 3.73 times less risky than AIR CHINA. The stock trades about -0.23 of its potential returns per unit of risk. The AIR CHINA LTD is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,150 in AIR CHINA LTD on November 5, 2024 and sell it today you would lose (40.00) from holding AIR CHINA LTD or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Canadian Utilities Limited vs. AIR CHINA LTD
Performance |
| Timeline |
| Canadian Utilities |
| AIR CHINA LTD |
Canadian Utilities and AIR CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and AIR CHINA
The main advantage of trading using opposite Canadian Utilities and AIR CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, AIR CHINA 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 CHINA will offset losses from the drop in AIR CHINA's long position.| Canadian Utilities vs. Iberdrola SA | Canadian Utilities vs. Enel SpA | Canadian Utilities vs. Enel SpA | Canadian Utilities vs. Dominion Energy |
| AIR CHINA vs. HOCHSCHILD MINING | AIR CHINA vs. ETFS Coffee ETC | AIR CHINA vs. VARIOUS EATERIES LS | AIR CHINA vs. CLOVER HEALTH INV |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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