Correlation Between PARKEN Sport and AIR CHINA
Can any of the company-specific risk be diversified away by investing in both PARKEN Sport 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 PARKEN Sport and AIR CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKEN Sport Entertainment and AIR CHINA LTD, you can compare the effects of market volatilities on PARKEN Sport 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 PARKEN Sport with a short position of AIR CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and AIR CHINA.
Diversification Opportunities for PARKEN Sport and AIR CHINA
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PARKEN and AIR is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment 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 PARKEN Sport 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 PARKEN Sport Entertainment 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 PARKEN Sport i.e., PARKEN Sport and AIR CHINA go up and down completely randomly.
Pair Corralation between PARKEN Sport and AIR CHINA
Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 2.19 times more return on investment than AIR CHINA. However, PARKEN Sport is 2.19 times more volatile than AIR CHINA LTD. It trades about 0.07 of its potential returns per unit of risk. AIR CHINA LTD is currently generating about -0.01 per unit of risk. If you would invest 397.00 in PARKEN Sport Entertainment on September 12, 2024 and sell it today you would earn a total of 1,288 from holding PARKEN Sport Entertainment or generate 324.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PARKEN Sport Entertainment vs. AIR CHINA LTD
Performance |
| Timeline |
| PARKEN Sport Enterta |
| AIR CHINA LTD |
PARKEN Sport and AIR CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKEN Sport and AIR CHINA
The main advantage of trading using opposite PARKEN Sport and AIR CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport 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.| PARKEN Sport vs. The Walt Disney | PARKEN Sport vs. Charter Communications | PARKEN Sport vs. Warner Music Group | PARKEN Sport vs. Superior Plus Corp |
| AIR CHINA vs. ASSOC BR FOODS | AIR CHINA vs. Lion One Metals | AIR CHINA vs. PARKEN Sport Entertainment | AIR CHINA vs. PREMIER FOODS |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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