Correlation Between ABO-GROUP ENVIRONMENT and China Southern

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

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

Diversification Opportunities for ABO-GROUP ENVIRONMENT and China Southern

-0.89

Correlation Coefficient

ABO-GROUP ENVIRONMENT  China Southern

Pay attention - limited upside

The 3 months correlation between ABO-GROUP and China is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding ABO GROUP ENVIRONMENT and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines and ABO-GROUP ENVIRONMENT 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 ABO GROUP ENVIRONMENT are associated (or correlated) with China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of ABO-GROUP ENVIRONMENT i.e., ABO-GROUP ENVIRONMENT and China Southern go up and down completely randomly.

Pair Corralation between ABO-GROUP ENVIRONMENT and China Southern

Assuming the 90 days trading horizon ABO GROUP ENVIRONMENT is expected to under-perform the China Southern. But the stock apears to be less risky and, when comparing its historical volatility, ABO GROUP ENVIRONMENT is 1.66 times less risky than China Southern. The stock trades about -0.03 of its potential returns per unit of risk. The China Southern Airlines is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  34.00  in China Southern Airlines on October 4, 2024 and sell it today you would earn a total of  16.00  from holding China Southern Airlines or generate 47.06% return on investment over 90 days.

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

ABO GROUP ENVIRONMENT  vs.  China Southern Airlines

ABO GROUP ENVIRONMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABO GROUP ENVIRONMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

China Southern Airlines

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with ABO-GROUP ENVIRONMENT and China Southern

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

The idea behind ABO GROUP ENVIRONMENT and China Southern 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.