Correlation Between NYSE Composite and China Eastern
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and China Eastern 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 NYSE Composite and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and China Eastern Airlines, you can compare the effects of market volatilities on NYSE Composite and China Eastern 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 NYSE Composite with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and China Eastern.
Diversification Opportunities for NYSE Composite and China Eastern
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and China is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and NYSE Composite 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 NYSE Composite are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of NYSE Composite i.e., NYSE Composite and China Eastern go up and down completely randomly.
Pair Corralation between NYSE Composite and China Eastern
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.34 times more return on investment than China Eastern. However, NYSE Composite is 2.92 times less risky than China Eastern. It trades about 0.08 of its potential returns per unit of risk. China Eastern Airlines is currently generating about -0.03 per unit of risk. If you would invest 1,529,105 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 491,877 from holding NYSE Composite or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 16.57% |
| Values | Daily Returns |
NYSE Composite vs. China Eastern Airlines
Performance |
| Timeline |
NYSE Composite and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
China Eastern Airlines
Pair trading matchups for China Eastern
Pair Trading with NYSE Composite and China Eastern
The main advantage of trading using opposite NYSE Composite and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, China Eastern 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 Eastern will offset losses from the drop in China Eastern's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| China Eastern vs. Alta Equipment Group | China Eastern vs. Triton International Limited | China Eastern vs. Semtech | China Eastern vs. Vestis |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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