Correlation Between China Airlines and Analog Integrations

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

By analyzing existing cross correlation between China Airlines and Analog Integrations, you can compare the effects of market volatilities on China Airlines and Analog Integrations 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 Analog Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Airlines and Analog Integrations.

Diversification Opportunities for China Airlines and Analog Integrations

-0.75

Correlation Coefficient

China Airlines  Analog Integrations

Pay attention - limited upside

The 3 months correlation between China and Analog is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Airlines and Analog Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Integrations 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 Analog Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Integrations has no effect on the direction of China Airlines i.e., China Airlines and Analog Integrations go up and down completely randomly.

Pair Corralation between China Airlines and Analog Integrations

Assuming the 90 days trading horizon China Airlines is expected to generate 0.57 times more return on investment than Analog Integrations. However, China Airlines is 1.75 times less risky than Analog Integrations. It trades about 0.04 of its potential returns per unit of risk. Analog Integrations is currently generating about 0.02 per unit of risk. If you would invest  1,910  in China Airlines on September 16, 2024 and sell it today you would earn a total of  690.00  from holding China Airlines or generate 36.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

China Airlines  vs.  Analog Integrations

China Airlines

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in China Airlines are ranked lower than 19 (%) 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.

Analog Integrations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Integrations 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 Analog Integrations

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

The idea behind China Airlines and Analog Integrations 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.