Correlation Between Der International and China Express

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

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

Diversification Opportunities for Der International and China Express

0.57

Correlation Coefficient

Der International  China Express

Very weak diversification

The 3 months correlation between Der and China is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Der International Home and China Express Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Express Airlines and Der International 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 Der International Home are associated (or correlated) with China Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Express Airlines has no effect on the direction of Der International i.e., Der International and China Express go up and down completely randomly.

Pair Corralation between Der International and China Express

Assuming the 90 days trading horizon Der International Home is expected to generate 1.17 times more return on investment than China Express. However, Der International is 1.17 times more volatile than China Express Airlines. It trades about 0.0 of its potential returns per unit of risk. China Express Airlines is currently generating about -0.03 per unit of risk. If you would invest  581.00  in Der International Home on September 30, 2024 and sell it today you would lose (106.00) from holding Der International Home or give up 18.24% of portfolio value over 90 days.

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

Der International Home  vs.  China Express Airlines

Der International Home

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Der International Home are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Der International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

China Express Airlines

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Express Airlines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Express sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Der International and China Express

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

The idea behind Der International Home and China Express Airlines 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.