Correlation Between Guangdong Investment and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Alaska Air 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 Guangdong Investment and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Alaska Air Group, you can compare the effects of market volatilities on Guangdong Investment and Alaska Air 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 Guangdong Investment with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Alaska Air.
Diversification Opportunities for Guangdong Investment and Alaska Air
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Guangdong and Alaska is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group and Guangdong Investment 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 Guangdong Investment Limited are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Alaska Air go up and down completely randomly.
Pair Corralation between Guangdong Investment and Alaska Air
Assuming the 90 days horizon Guangdong Investment is expected to generate 1.86 times less return on investment than Alaska Air. In addition to that, Guangdong Investment is 2.45 times more volatile than Alaska Air Group. It trades about 0.02 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.09 per unit of volatility. If you would invest 3,561 in Alaska Air Group on September 3, 2024 and sell it today you would earn a total of 1,755 from holding Alaska Air Group or generate 49.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Alaska Air Group
Performance |
| Timeline |
| Guangdong Investment |
| Alaska Air Group |
Guangdong Investment and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Alaska Air
The main advantage of trading using opposite Guangdong Investment and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Guangdong Investment | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Beijing Enterprises Water |
| Alaska Air vs. Copa Holdings SA | Alaska Air vs. SkyWest | Alaska Air vs. Air Transport Services | Alaska Air vs. Mesa Air Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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