Correlation Between Chengdu PUTIAN and Air New
Can any of the company-specific risk be diversified away by investing in both Chengdu PUTIAN and Air New 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 Chengdu PUTIAN and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chengdu PUTIAN Telecommunications and Air New Zealand, you can compare the effects of market volatilities on Chengdu PUTIAN and Air New 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 Chengdu PUTIAN with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu PUTIAN and Air New.
Diversification Opportunities for Chengdu PUTIAN and Air New
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chengdu and Air is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu PUTIAN Telecommunicati and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and Chengdu PUTIAN 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 Chengdu PUTIAN Telecommunications are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Chengdu PUTIAN i.e., Chengdu PUTIAN and Air New go up and down completely randomly.
Pair Corralation between Chengdu PUTIAN and Air New
Assuming the 90 days trading horizon Chengdu PUTIAN Telecommunications is expected to generate 2.99 times more return on investment than Air New. However, Chengdu PUTIAN is 2.99 times more volatile than Air New Zealand. It trades about 0.09 of its potential returns per unit of risk. Air New Zealand is currently generating about 0.07 per unit of risk. If you would invest 5.05 in Chengdu PUTIAN Telecommunications on November 3, 2024 and sell it today you would earn a total of 2.75 from holding Chengdu PUTIAN Telecommunications or generate 54.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu PUTIAN Telecommunicati vs. Air New Zealand
Performance |
| Timeline |
| Chengdu PUTIAN Telec |
| Air New Zealand |
Chengdu PUTIAN and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu PUTIAN and Air New
The main advantage of trading using opposite Chengdu PUTIAN and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu PUTIAN position performs unexpectedly, Air New 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 New will offset losses from the drop in Air New's long position.| Chengdu PUTIAN vs. PICKN PAY STORES | Chengdu PUTIAN vs. Tyson Foods | Chengdu PUTIAN vs. PATTIES FOODS | Chengdu PUTIAN vs. BURLINGTON STORES |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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