Correlation Between FLOW TRADERS and China Eastern
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and China Eastern Airlines, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and China Eastern.
Diversification Opportunities for FLOW TRADERS and China Eastern
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FLOW and China is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD 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 FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and China Eastern go up and down completely randomly.
Pair Corralation between FLOW TRADERS and China Eastern
Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.7 times more return on investment than China Eastern. However, FLOW TRADERS LTD is 1.42 times less risky than China Eastern. It trades about 0.21 of its potential returns per unit of risk. China Eastern Airlines is currently generating about 0.01 per unit of risk. If you would invest 2,130 in FLOW TRADERS LTD on October 26, 2024 and sell it today you would earn a total of 172.00 from holding FLOW TRADERS LTD or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. China Eastern Airlines
Performance |
| Timeline |
| FLOW TRADERS LTD |
| China Eastern Airlines |
FLOW TRADERS and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and China Eastern
The main advantage of trading using opposite FLOW TRADERS and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. Origin Agritech | FLOW TRADERS vs. Identiv |
| China Eastern vs. Autohome ADR | China Eastern vs. FLOW TRADERS LTD | China Eastern vs. OFFICE DEPOT | China Eastern vs. Haverty Furniture Companies |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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