Correlation Between Unigroup Guoxin and Air China

Can any of the company-specific risk be diversified away by investing in both Unigroup Guoxin 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 Unigroup Guoxin and Air China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Unigroup Guoxin Microelectronics and Air China Ltd, you can compare the effects of market volatilities on Unigroup Guoxin 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 Unigroup Guoxin with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unigroup Guoxin and Air China.

Diversification Opportunities for Unigroup Guoxin and Air China

0.35

Correlation Coefficient

Unigroup Guoxin  Air China

Weak diversification

The 3 months correlation between Unigroup and Air is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Unigroup Guoxin Microelectroni and Air China Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China and Unigroup Guoxin 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 Unigroup Guoxin Microelectronics 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 has no effect on the direction of Unigroup Guoxin i.e., Unigroup Guoxin and Air China go up and down completely randomly.

Pair Corralation between Unigroup Guoxin and Air China

Assuming the 90 days trading horizon Unigroup Guoxin Microelectronics is expected to generate 1.53 times more return on investment than Air China. However, Unigroup Guoxin is 1.53 times more volatile than Air China Ltd. It trades about 0.06 of its potential returns per unit of risk. Air China Ltd is currently generating about 0.03 per unit of risk. If you would invest  6,237  in Unigroup Guoxin Microelectronics on September 30, 2024 and sell it today you would earn a total of  575.00  from holding Unigroup Guoxin Microelectronics or generate 9.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Unigroup Guoxin Microelectroni  vs.  Air China Ltd

Unigroup Guoxin Micr

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unigroup Guoxin Microelectronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unigroup Guoxin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Air China

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air China Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Air China is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Unigroup Guoxin and Air China

The main advantage of trading using opposite Unigroup Guoxin and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unigroup Guoxin 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.

The idea behind Unigroup Guoxin Microelectronics and Air China Ltd 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.

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 Stocks Directory module to find actively traded stocks across global markets.