Correlation Between Dana and China Aircraft
Can any of the company-specific risk be diversified away by investing in both Dana and China Aircraft 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 Dana and China Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Inc and China Aircraft Leasing, you can compare the effects of market volatilities on Dana and China Aircraft 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 Dana with a short position of China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and China Aircraft.
Diversification Opportunities for Dana and China Aircraft
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dana and China is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing and Dana 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 Dana Inc are associated (or correlated) with China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of Dana i.e., Dana and China Aircraft go up and down completely randomly.
Pair Corralation between Dana and China Aircraft
If you would invest 758.00 in Dana Inc on September 1, 2024 and sell it today you would earn a total of 242.00 from holding Dana Inc or generate 31.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. China Aircraft Leasing
Performance |
| Timeline |
| Dana Inc |
| China Aircraft Leasing |
Dana and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and China Aircraft
The main advantage of trading using opposite Dana and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, China Aircraft 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 China Aircraft will offset losses from the drop in China Aircraft's long position.The idea behind Dana Inc and China Aircraft Leasing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| China Aircraft vs. Employers Holdings | China Aircraft vs. Here Media | China Aircraft vs. Kinsale Capital Group | China Aircraft vs. Sun Life Financial |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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