Correlation Between CHINA SOUTHN and WIZZ AIR
Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and WIZZ AIR 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 SOUTHN and WIZZ AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA SOUTHN AIR H and WIZZ AIR HLDGUNSPADR4, you can compare the effects of market volatilities on CHINA SOUTHN and WIZZ AIR 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 SOUTHN with a short position of WIZZ AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and WIZZ AIR.
Diversification Opportunities for CHINA SOUTHN and WIZZ AIR
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and WIZZ is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and WIZZ AIR HLDGUNSPADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIZZ AIR HLDGUNSPADR4 and CHINA SOUTHN 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 SOUTHN AIR H are associated (or correlated) with WIZZ AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIZZ AIR HLDGUNSPADR4 has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and WIZZ AIR go up and down completely randomly.
Pair Corralation between CHINA SOUTHN and WIZZ AIR
Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to generate 0.84 times more return on investment than WIZZ AIR. However, CHINA SOUTHN AIR H is 1.2 times less risky than WIZZ AIR. It trades about -0.01 of its potential returns per unit of risk. WIZZ AIR HLDGUNSPADR4 is currently generating about -0.02 per unit of risk. If you would invest 65.00 in CHINA SOUTHN AIR H on October 12, 2024 and sell it today you would lose (18.00) from holding CHINA SOUTHN AIR H or give up 27.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA SOUTHN AIR H vs. WIZZ AIR HLDGUNSPADR4
Performance |
| Timeline |
| CHINA SOUTHN AIR |
| WIZZ AIR HLDGUNSPADR4 |
CHINA SOUTHN and WIZZ AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SOUTHN and WIZZ AIR
The main advantage of trading using opposite CHINA SOUTHN and WIZZ AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN position performs unexpectedly, WIZZ AIR 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 WIZZ AIR will offset losses from the drop in WIZZ AIR's long position.| CHINA SOUTHN vs. Insurance Australia Group | CHINA SOUTHN vs. QBE Insurance Group | CHINA SOUTHN vs. SBI Insurance Group | CHINA SOUTHN vs. Reinsurance Group of |
| WIZZ AIR vs. American Airlines Group | WIZZ AIR vs. Grupo Carso SAB | WIZZ AIR vs. Commercial Vehicle Group | WIZZ AIR vs. China Eastern Airlines |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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