Correlation Between Joint Stock and China Aircraft
Can any of the company-specific risk be diversified away by investing in both Joint Stock 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 Joint Stock and China Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Joint Stock and China Aircraft Leasing, you can compare the effects of market volatilities on Joint Stock 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 Joint Stock with a short position of China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joint Stock and China Aircraft.
Diversification Opportunities for Joint Stock and China Aircraft
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Joint and China is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock 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 Joint Stock 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 Joint Stock 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 Joint Stock i.e., Joint Stock and China Aircraft go up and down completely randomly.
Pair Corralation between Joint Stock and China Aircraft
Given the investment horizon of 90 days Joint Stock is expected to generate 1.92 times less return on investment than China Aircraft. But when comparing it to its historical volatility, Joint Stock is 1.55 times less risky than China Aircraft. It trades about 0.07 of its potential returns per unit of risk. China Aircraft Leasing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in China Aircraft Leasing on September 2, 2024 and sell it today you would earn a total of 26.00 from holding China Aircraft Leasing or generate 185.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 74.19% |
| Values | Daily Returns |
Joint Stock vs. China Aircraft Leasing
Performance |
| Timeline |
| Joint Stock |
| China Aircraft Leasing |
Joint Stock and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Joint Stock and China Aircraft
The main advantage of trading using opposite Joint Stock and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joint Stock 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.| Joint Stock vs. SentinelOne | Joint Stock vs. BlackBerry | Joint Stock vs. Global Blue Group | Joint Stock vs. Aurora Mobile |
| China Aircraft vs. Ambev SA ADR | China Aircraft vs. Volaris | China Aircraft vs. Copa Holdings SA | China Aircraft vs. Molson Coors Brewing |
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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