Correlation Between China Express and Vontron Technology

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

By analyzing existing cross correlation between China Express Airlines and Vontron Technology Co, you can compare the effects of market volatilities on China Express and Vontron Technology 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 Express with a short position of Vontron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Express and Vontron Technology.

Diversification Opportunities for China Express and Vontron Technology

0.85

Correlation Coefficient

China Express  Vontron Technology

Very poor diversification

The 3 months correlation between China and Vontron is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding China Express Airlines and Vontron Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontron Technology and China Express 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 Express Airlines are associated (or correlated) with Vontron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontron Technology has no effect on the direction of China Express i.e., China Express and Vontron Technology go up and down completely randomly.

Pair Corralation between China Express and Vontron Technology

Assuming the 90 days trading horizon China Express Airlines is expected to generate 1.02 times more return on investment than Vontron Technology. However, China Express is 1.02 times more volatile than Vontron Technology Co. It trades about 0.07 of its potential returns per unit of risk. Vontron Technology Co is currently generating about 0.03 per unit of risk. If you would invest  721.00  in China Express Airlines on September 28, 2024 and sell it today you would earn a total of  69.00  from holding China Express Airlines or generate 9.57% return on investment over 90 days.

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

China Express Airlines  vs.  Vontron Technology Co

China Express Airlines

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Express Airlines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Express may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vontron Technology

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with China Express and Vontron Technology

The main advantage of trading using opposite China Express and Vontron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Express position performs unexpectedly, Vontron Technology 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 Vontron Technology will offset losses from the drop in Vontron Technology's long position.

The idea behind China Express Airlines and Vontron Technology Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.