Correlation Between Astra International and China Southern
Can any of the company-specific risk be diversified away by investing in both Astra International and China Southern 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 Astra International and China Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astra International Tbk and China Southern Airlines, you can compare the effects of market volatilities on Astra International and China Southern 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 Astra International with a short position of China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra International and China Southern.
Diversification Opportunities for Astra International and China Southern
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astra and China is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines and Astra International 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 Astra International Tbk are associated (or correlated) with China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of Astra International i.e., Astra International and China Southern go up and down completely randomly.
Pair Corralation between Astra International and China Southern
Assuming the 90 days horizon Astra International Tbk is expected to generate 0.24 times more return on investment than China Southern. However, Astra International Tbk is 4.09 times less risky than China Southern. It trades about 0.0 of its potential returns per unit of risk. China Southern Airlines is currently generating about -0.01 per unit of risk. If you would invest 650.00 in Astra International Tbk on November 19, 2024 and sell it today you would lose (61.00) from holding Astra International Tbk or give up 9.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 39.19% |
| Values | Daily Returns |
Astra International Tbk vs. China Southern Airlines
Performance |
| Timeline |
| Astra International Tbk |
| China Southern Airlines |
Astra International and China Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astra International and China Southern
The main advantage of trading using opposite Astra International and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra International position performs unexpectedly, China Southern 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 Southern will offset losses from the drop in China Southern's long position.| Astra International vs. Eli Lilly and | Astra International vs. Costco Wholesale Corp | Astra International vs. Goldman Sachs Group | Astra International vs. Arista Networks |
| China Southern vs. Cebu Air | China Southern vs. Finnair Oyj | China Southern vs. easyJet plc | China Southern vs. Norse Atlantic ASA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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