Correlation Between Hainan Airlines and Tongyu Communication
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By analyzing existing cross correlation between Hainan Airlines Co and Tongyu Communication, you can compare the effects of market volatilities on Hainan Airlines and Tongyu Communication 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 Hainan Airlines with a short position of Tongyu Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Airlines and Tongyu Communication.
Diversification Opportunities for Hainan Airlines and Tongyu Communication
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hainan and Tongyu is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Airlines Co and Tongyu Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongyu Communication and Hainan 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 Hainan Airlines Co are associated (or correlated) with Tongyu Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongyu Communication has no effect on the direction of Hainan Airlines i.e., Hainan Airlines and Tongyu Communication go up and down completely randomly.
Pair Corralation between Hainan Airlines and Tongyu Communication
Assuming the 90 days trading horizon Hainan Airlines Co is expected to generate 1.16 times more return on investment than Tongyu Communication. However, Hainan Airlines is 1.16 times more volatile than Tongyu Communication. It trades about 0.23 of its potential returns per unit of risk. Tongyu Communication is currently generating about 0.16 per unit of risk. If you would invest 103.00 in Hainan Airlines Co on September 21, 2024 and sell it today you would earn a total of 81.00 from holding Hainan Airlines Co or generate 78.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hainan Airlines Co vs. Tongyu Communication
Performance |
Timeline |
Hainan Airlines |
Tongyu Communication |
Hainan Airlines and Tongyu Communication Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hainan Airlines and Tongyu Communication
The main advantage of trading using opposite Hainan Airlines and Tongyu Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hainan Airlines position performs unexpectedly, Tongyu Communication 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 Tongyu Communication will offset losses from the drop in Tongyu Communication's long position.Hainan Airlines vs. China State Construction | ||
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Check out your portfolio center.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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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