Correlation Between SERI INDUSTRIAL and Air China
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL 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 SERI INDUSTRIAL and Air China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and Air China Limited, you can compare the effects of market volatilities on SERI INDUSTRIAL 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 SERI INDUSTRIAL with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and Air China.
Diversification Opportunities for SERI INDUSTRIAL and Air China
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SERI and Air is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 SERI INDUSTRIAL i.e., SERI INDUSTRIAL and Air China go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and Air China
Assuming the 90 days trading horizon SERI INDUSTRIAL is expected to generate 11.78 times less return on investment than Air China. In addition to that, SERI INDUSTRIAL is 1.02 times more volatile than Air China Limited. It trades about 0.01 of its total potential returns per unit of risk. Air China Limited is currently generating about 0.06 per unit of volatility. If you would invest 45.00 in Air China Limited on September 3, 2024 and sell it today you would earn a total of 15.00 from holding Air China Limited or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. Air China Limited
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| Air China Limited |
SERI INDUSTRIAL and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and Air China
The main advantage of trading using opposite SERI INDUSTRIAL and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL 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.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| Air China vs. Entravision Communications | Air China vs. Hemisphere Energy Corp | Air China vs. Charter Communications | Air China vs. LION ONE METALS |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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