Correlation Between China Southern and NETGEAR
Can any of the company-specific risk be diversified away by investing in both China Southern and NETGEAR 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 China Southern and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Southern Airlines and NETGEAR, you can compare the effects of market volatilities on China Southern and NETGEAR 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 China Southern with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Southern and NETGEAR.
Diversification Opportunities for China Southern and NETGEAR
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and NETGEAR is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding China Southern Airlines and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and China Southern 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 China Southern Airlines are associated (or correlated) with NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of China Southern i.e., China Southern and NETGEAR go up and down completely randomly.
Pair Corralation between China Southern and NETGEAR
Considering the 90-day investment horizon China Southern Airlines is expected to generate 0.66 times more return on investment than NETGEAR. However, China Southern Airlines is 1.52 times less risky than NETGEAR. It trades about 0.12 of its potential returns per unit of risk. NETGEAR is currently generating about 0.04 per unit of risk. If you would invest 3,338 in China Southern Airlines on September 13, 2024 and sell it today you would earn a total of 359.00 from holding China Southern Airlines or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 9.9% |
| Values | Daily Returns |
China Southern Airlines vs. NETGEAR
Performance |
| Timeline |
| China Southern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| NETGEAR |
China Southern and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Southern and NETGEAR
The main advantage of trading using opposite China Southern and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Southern position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| China Southern vs. Tesla Inc | China Southern vs. Weibo Corp | China Southern vs. Grupo Televisa SAB | China Southern vs. Ziff Davis |
| NETGEAR vs. Passage Bio | NETGEAR vs. Black Diamond Therapeutics | NETGEAR vs. Alector | NETGEAR vs. Century Therapeutics |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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