Correlation Between China Eastern and ZYF Lopsking

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

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

Diversification Opportunities for China Eastern and ZYF Lopsking

0.31

Correlation Coefficient

China Eastern  ZYF Lopsking

Weak diversification

The 3 months correlation between China and ZYF is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and ZYF Lopsking Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZYF Lopsking Aluminum and China Eastern 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 Eastern Airlines are associated (or correlated) with ZYF Lopsking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZYF Lopsking Aluminum has no effect on the direction of China Eastern i.e., China Eastern and ZYF Lopsking go up and down completely randomly.

Pair Corralation between China Eastern and ZYF Lopsking

Assuming the 90 days trading horizon China Eastern Airlines is expected to under-perform the ZYF Lopsking. But the stock apears to be less risky and, when comparing its historical volatility, China Eastern Airlines is 1.19 times less risky than ZYF Lopsking. The stock trades about -0.1 of its potential returns per unit of risk. The ZYF Lopsking Aluminum is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  531.00  in ZYF Lopsking Aluminum on December 24, 2024 and sell it today you would earn a total of  33.00  from holding ZYF Lopsking Aluminum or generate 6.21% return on investment over 90 days.

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

China Eastern Airlines  vs.  ZYF Lopsking Aluminum

China Eastern Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Eastern Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ZYF Lopsking Aluminum

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZYF Lopsking Aluminum are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ZYF Lopsking may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with China Eastern and ZYF Lopsking

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

The idea behind China Eastern Airlines and ZYF Lopsking Aluminum 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.