Correlation Between Hawaiian Holdings and Guangshen Railway
Can any of the company-specific risk be diversified away by investing in both Hawaiian Holdings and Guangshen Railway 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 Hawaiian Holdings and Guangshen Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawaiian Holdings and Guangshen Railway, you can compare the effects of market volatilities on Hawaiian Holdings and Guangshen Railway 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 Hawaiian Holdings with a short position of Guangshen Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Holdings and Guangshen Railway.
Diversification Opportunities for Hawaiian Holdings and Guangshen Railway
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and Guangshen is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Holdings and Guangshen Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangshen Railway and Hawaiian Holdings 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 Hawaiian Holdings are associated (or correlated) with Guangshen Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangshen Railway has no effect on the direction of Hawaiian Holdings i.e., Hawaiian Holdings and Guangshen Railway go up and down completely randomly.
Pair Corralation between Hawaiian Holdings and Guangshen Railway
Allowing for the 90-day total investment horizon Hawaiian Holdings is expected to generate 4.21 times less return on investment than Guangshen Railway. But when comparing it to its historical volatility, Hawaiian Holdings is 1.69 times less risky than Guangshen Railway. It trades about 0.03 of its potential returns per unit of risk. Guangshen Railway is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Guangshen Railway on September 4, 2024 and sell it today you would earn a total of 7.00 from holding Guangshen Railway or generate 41.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.85% |
| Values | Daily Returns |
Hawaiian Holdings vs. Guangshen Railway
Performance |
| Timeline |
| Hawaiian Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Guangshen Railway |
Hawaiian Holdings and Guangshen Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Holdings and Guangshen Railway
The main advantage of trading using opposite Hawaiian Holdings and Guangshen Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Holdings position performs unexpectedly, Guangshen Railway 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 Guangshen Railway will offset losses from the drop in Guangshen Railway's long position.| Hawaiian Holdings vs. Southwest Airlines | Hawaiian Holdings vs. JetBlue Airways Corp | Hawaiian Holdings vs. United Airlines Holdings | Hawaiian Holdings vs. Delta Air Lines |
| Guangshen Railway vs. LB Foster | Guangshen Railway vs. Norfolk Southern | Guangshen Railway vs. Union Pacific | Guangshen Railway vs. Canadian Pacific Railway |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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