Correlation Between Shenandoah Telecommunicatio and China Eastern
Can any of the company-specific risk be diversified away by investing in both Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenandoah Telecommunications and China Eastern Airlines, you can compare the effects of market volatilities on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and China Eastern.
Diversification Opportunities for Shenandoah Telecommunicatio and China Eastern
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shenandoah and China is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications 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 Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and China Eastern go up and down completely randomly.
Pair Corralation between Shenandoah Telecommunicatio and China Eastern
Assuming the 90 days horizon Shenandoah Telecommunications is expected to under-perform the China Eastern. But the stock apears to be less risky and, when comparing its historical volatility, Shenandoah Telecommunications is 1.37 times less risky than China Eastern. The stock trades about -0.01 of its potential returns per unit of risk. The China Eastern Airlines is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 37.00 in China Eastern Airlines on October 12, 2024 and sell it today you would lose (8.00) from holding China Eastern Airlines or give up 21.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenandoah Telecommunications vs. China Eastern Airlines
Performance |
| Timeline |
| Shenandoah Telecommunicatio |
| China Eastern Airlines |
Shenandoah Telecommunicatio and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenandoah Telecommunicatio and China Eastern
The main advantage of trading using opposite Shenandoah Telecommunicatio and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenandoah Telecommunicatio 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.The idea behind Shenandoah Telecommunications and China Eastern Airlines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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