Correlation Between Air Transport and Mingzhu Logistics

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

By analyzing existing cross correlation between Air Transport Services and Mingzhu Logistics Holdings, you can compare the effects of market volatilities on Air Transport and Mingzhu Logistics 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 Air Transport with a short position of Mingzhu Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Mingzhu Logistics.

Diversification Opportunities for Air Transport and Mingzhu Logistics

-0.54

Correlation Coefficient

Air Transport  Mingzhu Logistics

Excellent diversification

The 3 months correlation between Air and Mingzhu is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Mingzhu Logistics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingzhu Logistics and Air Transport 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 Air Transport Services are associated (or correlated) with Mingzhu Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mingzhu Logistics has no effect on the direction of Air Transport i.e., Air Transport and Mingzhu Logistics go up and down completely randomly.

Pair Corralation between Air Transport and Mingzhu Logistics

Given the investment horizon of 90 days Air Transport Services is expected to generate 0.61 times more return on investment than Mingzhu Logistics. However, Air Transport Services is 1.63 times less risky than Mingzhu Logistics. It trades about 0.17 of its potential returns per unit of risk. Mingzhu Logistics Holdings is currently generating about -0.03 per unit of risk. If you would invest  1,534  in Air Transport Services on September 22, 2024 and sell it today you would earn a total of  653.00  from holding Air Transport Services or generate 42.57% return on investment over 90 days.

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

Air Transport Services  vs.  Mingzhu Logistics Holdings

Air Transport Services

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Mingzhu Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mingzhu Logistics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain fairly 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 Air Transport and Mingzhu Logistics

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

The idea behind Air Transport Services and Mingzhu Logistics Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.