Correlation Between SIMS METAL and Air China
Can any of the company-specific risk be diversified away by investing in both SIMS METAL 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 SIMS METAL and Air China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMS METAL MGT and Air China Limited, you can compare the effects of market volatilities on SIMS METAL 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 SIMS METAL with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and Air China.
Diversification Opportunities for SIMS METAL and Air China
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SIMS and Air is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and Air China Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China Limited and SIMS METAL 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 SIMS METAL MGT 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 Limited has no effect on the direction of SIMS METAL i.e., SIMS METAL and Air China go up and down completely randomly.
Pair Corralation between SIMS METAL and Air China
Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 0.35 times more return on investment than Air China. However, SIMS METAL MGT is 2.85 times less risky than Air China. It trades about 0.48 of its potential returns per unit of risk. Air China Limited is currently generating about -0.01 per unit of risk. If you would invest 780.00 in SIMS METAL MGT on December 1, 2024 and sell it today you would earn a total of 100.00 from holding SIMS METAL MGT or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. Air China Limited
Performance |
| Timeline |
| SIMS METAL MGT |
| Air China Limited |
SIMS METAL and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and Air China
The main advantage of trading using opposite SIMS METAL and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL 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.| SIMS METAL vs. FAST RETAIL ADR | SIMS METAL vs. Air Transport Services | SIMS METAL vs. SCIENCE IN SPORT | SIMS METAL vs. Transport International Holdings |
| Air China vs. Direct Line Insurance | Air China vs. Ping An Insurance | Air China vs. REVO INSURANCE SPA | Air China vs. Wyndham Hotels Resorts |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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