Correlation Between COMPUTERSHARE and Air China
Can any of the company-specific risk be diversified away by investing in both COMPUTERSHARE 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 COMPUTERSHARE and Air China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMPUTERSHARE and Air China Limited, you can compare the effects of market volatilities on COMPUTERSHARE 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 COMPUTERSHARE with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMPUTERSHARE and Air China.
Diversification Opportunities for COMPUTERSHARE and Air China
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between COMPUTERSHARE and Air is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding COMPUTERSHARE 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 COMPUTERSHARE 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 COMPUTERSHARE 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 COMPUTERSHARE i.e., COMPUTERSHARE and Air China go up and down completely randomly.
Pair Corralation between COMPUTERSHARE and Air China
Assuming the 90 days trading horizon COMPUTERSHARE is expected to generate 0.5 times more return on investment than Air China. However, COMPUTERSHARE is 2.0 times less risky than Air China. It trades about 0.01 of its potential returns per unit of risk. Air China Limited is currently generating about -0.14 per unit of risk. If you would invest 2,000 in COMPUTERSHARE on October 11, 2024 and sell it today you would earn a total of 0.00 from holding COMPUTERSHARE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMPUTERSHARE vs. Air China Limited
Performance |
| Timeline |
| COMPUTERSHARE |
| Air China Limited |
COMPUTERSHARE and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMPUTERSHARE and Air China
The main advantage of trading using opposite COMPUTERSHARE and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMPUTERSHARE 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.| COMPUTERSHARE vs. REMEDY ENTERTAINMENT OYJ | COMPUTERSHARE vs. AEGEAN AIRLINES | COMPUTERSHARE vs. Gol Intelligent Airlines | COMPUTERSHARE vs. Nok Airlines PCL |
| Air China vs. INTERSHOP Communications Aktiengesellschaft | Air China vs. Ebro Foods SA | Air China vs. COMPUTERSHARE | Air China vs. Charter Communications |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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