Correlation Between China Express and Liaoning Chengda
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By analyzing existing cross correlation between China Express Airlines and Liaoning Chengda Biotechnology, you can compare the effects of market volatilities on China Express and Liaoning Chengda 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 Liaoning Chengda. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Express and Liaoning Chengda.
Diversification Opportunities for China Express and Liaoning Chengda
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Liaoning is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding China Express Airlines and Liaoning Chengda Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Chengda Bio 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 Liaoning Chengda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Chengda Bio has no effect on the direction of China Express i.e., China Express and Liaoning Chengda go up and down completely randomly.
Pair Corralation between China Express and Liaoning Chengda
Assuming the 90 days trading horizon China Express Airlines is expected to generate 1.89 times more return on investment than Liaoning Chengda. However, China Express is 1.89 times more volatile than Liaoning Chengda Biotechnology. It trades about -0.03 of its potential returns per unit of risk. Liaoning Chengda Biotechnology is currently generating about -0.06 per unit of risk. If you would invest 829.00 in China Express Airlines on September 25, 2024 and sell it today you would lose (14.00) from holding China Express Airlines or give up 1.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
China Express Airlines vs. Liaoning Chengda Biotechnology
Performance |
Timeline |
China Express Airlines |
Liaoning Chengda Bio |
China Express and Liaoning Chengda Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Express and Liaoning Chengda
The main advantage of trading using opposite China Express and Liaoning Chengda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Express position performs unexpectedly, Liaoning Chengda 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 Liaoning Chengda will offset losses from the drop in Liaoning Chengda's long position.China Express vs. Industrial and Commercial | China Express vs. Agricultural Bank of | China Express vs. China Construction Bank | China Express vs. Bank of China |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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