Correlation Between Hainan Airlines and JCHX Mining

Can any of the company-specific risk be diversified away by investing in both Hainan Airlines and JCHX Mining 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 Hainan Airlines and JCHX Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hainan Airlines and JCHX Mining

-0.47

Correlation Coefficient

Hainan Airlines  JCHX Mining

Very good diversification

The 3 months correlation between Hainan and JCHX is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Airlines Co and JCHX Mining Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCHX Mining Management and Hainan Airlines 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 Hainan Airlines Co are associated (or correlated) with JCHX Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCHX Mining Management has no effect on the direction of Hainan Airlines i.e., Hainan Airlines and JCHX Mining go up and down completely randomly.

Pair Corralation between Hainan Airlines and JCHX Mining

Assuming the 90 days trading horizon Hainan Airlines Co is expected to generate 1.73 times more return on investment than JCHX Mining. However, Hainan Airlines is 1.73 times more volatile than JCHX Mining Management. It trades about 0.14 of its potential returns per unit of risk. JCHX Mining Management is currently generating about -0.16 per unit of risk. If you would invest  129.00  in Hainan Airlines Co on September 28, 2024 and sell it today you would earn a total of  48.00  from holding Hainan Airlines Co or generate 37.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Hainan Airlines Co  vs.  JCHX Mining Management

Hainan Airlines

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan Airlines Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hainan Airlines sustained solid returns over the last few months and may actually be approaching a breakup point.

JCHX Mining Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCHX Mining Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hainan Airlines and JCHX Mining

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

The idea behind Hainan Airlines Co and JCHX Mining Management 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.