Correlation Between Delta Air and CHINA SOUTHN
Can any of the company-specific risk be diversified away by investing in both Delta Air and CHINA SOUTHN 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 Delta Air and CHINA SOUTHN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and CHINA SOUTHN AIR H , you can compare the effects of market volatilities on Delta Air and CHINA SOUTHN 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 Delta Air with a short position of CHINA SOUTHN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and CHINA SOUTHN.
Diversification Opportunities for Delta Air and CHINA SOUTHN
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and CHINA is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and CHINA SOUTHN AIR H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA SOUTHN AIR and Delta Air 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 Delta Air Lines are associated (or correlated) with CHINA SOUTHN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA SOUTHN AIR has no effect on the direction of Delta Air i.e., Delta Air and CHINA SOUTHN go up and down completely randomly.
Pair Corralation between Delta Air and CHINA SOUTHN
Assuming the 90 days horizon Delta Air Lines is expected to generate 0.58 times more return on investment than CHINA SOUTHN. However, Delta Air Lines is 1.71 times less risky than CHINA SOUTHN. It trades about 0.22 of its potential returns per unit of risk. CHINA SOUTHN AIR H is currently generating about 0.08 per unit of risk. If you would invest 3,481 in Delta Air Lines on November 3, 2024 and sell it today you would earn a total of 3,073 from holding Delta Air Lines or generate 88.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. CHINA SOUTHN AIR H
Performance |
| Timeline |
| Delta Air Lines |
| CHINA SOUTHN AIR |
Delta Air and CHINA SOUTHN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and CHINA SOUTHN
The main advantage of trading using opposite Delta Air and CHINA SOUTHN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, CHINA SOUTHN 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 SOUTHN will offset losses from the drop in CHINA SOUTHN's long position.| Delta Air vs. Bio Techne Corp | Delta Air vs. United Insurance Holdings | Delta Air vs. BJs Restaurants | Delta Air vs. Easy Software AG |
| CHINA SOUTHN vs. Casio Computer CoLtd | CHINA SOUTHN vs. SINGAPORE AIRLINES | CHINA SOUTHN vs. AECOM TECHNOLOGY | CHINA SOUTHN vs. Kingdee International Software |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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