Correlation Between DAX Index and China Southern
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By analyzing existing cross correlation between DAX Index and China Southern Airlines, you can compare the effects of market volatilities on DAX Index and China Southern 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 DAX Index with a short position of China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and China Southern.
Diversification Opportunities for DAX Index and China Southern
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAX and China is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines and DAX Index 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 DAX Index are associated (or correlated) with China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of DAX Index i.e., DAX Index and China Southern go up and down completely randomly.
Pair Corralation between DAX Index and China Southern
Assuming the 90 days trading horizon DAX Index is expected to under-perform the China Southern. But the index apears to be less risky and, when comparing its historical volatility, DAX Index is 1.88 times less risky than China Southern. The index trades about -0.03 of its potential returns per unit of risk. The China Southern Airlines is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 38.00 in China Southern Airlines on August 28, 2024 and sell it today you would earn a total of 7.00 from holding China Southern Airlines or generate 18.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
DAX Index vs. China Southern Airlines
Performance |
| Timeline |
DAX Index and China Southern Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
China Southern Airlines
Pair trading matchups for China Southern
Pair Trading with DAX Index and China Southern
The main advantage of trading using opposite DAX Index and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, China Southern 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 Southern will offset losses from the drop in China Southern's long position.| DAX Index vs. ELMOS SEMICONDUCTOR | DAX Index vs. ALTAIR RES INC | DAX Index vs. Fair Isaac Corp | DAX Index vs. Taiwan Semiconductor Manufacturing |
| China Southern vs. Hitachi Construction Machinery | China Southern vs. Nordic Semiconductor ASA | China Southern vs. Dairy Farm International | China Southern vs. Chongqing Machinery Electric |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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