Correlation Between China Airlines and Run Long

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

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

Diversification Opportunities for China Airlines and Run Long

-0.47

Correlation Coefficient

China Airlines  Run Long

Very good diversification

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

Pair Corralation between China Airlines and Run Long

Assuming the 90 days trading horizon China Airlines is expected to generate 0.98 times more return on investment than Run Long. However, China Airlines is 1.02 times less risky than Run Long. It trades about 0.31 of its potential returns per unit of risk. Run Long Construction is currently generating about -0.41 per unit of risk. If you would invest  2,160  in China Airlines on September 19, 2024 and sell it today you would earn a total of  460.00  from holding China Airlines or generate 21.3% return on investment over 90 days.

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

China Airlines  vs.  Run Long Construction

China Airlines

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in China Airlines are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, China Airlines showed solid returns over the last few months and may actually be approaching a breakup point.

Run Long Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Run Long Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with China Airlines and Run Long

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

The idea behind China Airlines and Run Long Construction 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.