Correlation Between LION ONE and Air China
Can any of the company-specific risk be diversified away by investing in both LION ONE 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 LION ONE and Air China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and Air China Limited, you can compare the effects of market volatilities on LION ONE 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 LION ONE with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Air China.
Diversification Opportunities for LION ONE and Air China
Average diversification
The 3 months correlation between LION and Air is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS 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 LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and Air China go up and down completely randomly.
Pair Corralation between LION ONE and Air China
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Air China. In addition to that, LION ONE is 1.21 times more volatile than Air China Limited. It trades about -0.07 of its total potential returns per unit of risk. Air China Limited is currently generating about 0.01 per unit of volatility. If you would invest 62.00 in Air China Limited on September 4, 2024 and sell it today you would lose (5.00) from holding Air China Limited or give up 8.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Air China Limited
Performance |
| Timeline |
| LION ONE METALS |
| Air China Limited |
LION ONE and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Air China
The main advantage of trading using opposite LION ONE and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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.The idea behind LION ONE METALS and Air China Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Air China vs. TRADEDOUBLER AB SK | Air China vs. Auto Trader Group | Air China vs. AUTO TRADER ADR | Air China vs. Fast Retailing Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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