Correlation Between Alaska Air and Chanson International

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

By analyzing existing cross correlation between Alaska Air Group and Chanson International Holding, you can compare the effects of market volatilities on Alaska Air and Chanson International 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 Alaska Air with a short position of Chanson International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Chanson International.

Diversification Opportunities for Alaska Air and Chanson International

0.13

Correlation Coefficient

Alaska Air  Chanson International

Average diversification

The 3 months correlation between Alaska and Chanson is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Chanson International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chanson International and Alaska Air 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 Alaska Air Group are associated (or correlated) with Chanson International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chanson International has no effect on the direction of Alaska Air i.e., Alaska Air and Chanson International go up and down completely randomly.

Pair Corralation between Alaska Air and Chanson International

Considering the 90-day investment horizon Alaska Air is expected to generate 10.17 times less return on investment than Chanson International. But when comparing it to its historical volatility, Alaska Air Group is 10.86 times less risky than Chanson International. It trades about 0.09 of its potential returns per unit of risk. Chanson International Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  173.00  in Chanson International Holding on September 15, 2024 and sell it today you would earn a total of  568.00  from holding Chanson International Holding or generate 328.32% return on investment over 90 days.

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

Alaska Air Group  vs.  Chanson International Holding

Alaska Air Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, Alaska Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Chanson International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chanson International Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Chanson International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alaska Air and Chanson International

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

The idea behind Alaska Air Group and Chanson International Holding 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.