Correlation Between Juneyao Airlines and China Publishing

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

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

Diversification Opportunities for Juneyao Airlines and China Publishing

0.66

Correlation Coefficient

Juneyao Airlines  China Publishing

Poor diversification

The 3 months correlation between Juneyao and China is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Juneyao Airlines and China Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Publishing Media and Juneyao 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 Juneyao Airlines are associated (or correlated) with China Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Publishing Media has no effect on the direction of Juneyao Airlines i.e., Juneyao Airlines and China Publishing go up and down completely randomly.

Pair Corralation between Juneyao Airlines and China Publishing

Assuming the 90 days trading horizon Juneyao Airlines is expected to under-perform the China Publishing. In addition to that, Juneyao Airlines is 1.13 times more volatile than China Publishing Media. It trades about -0.06 of its total potential returns per unit of risk. China Publishing Media is currently generating about -0.06 per unit of volatility. If you would invest  754.00  in China Publishing Media on December 25, 2024 and sell it today you would lose (57.00) from holding China Publishing Media or give up 7.56% of portfolio value over 90 days.

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

Juneyao Airlines  vs.  China Publishing Media

Juneyao Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Juneyao 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.

China Publishing Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Publishing Media 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.

Pair Trading with Juneyao Airlines and China Publishing

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

The idea behind Juneyao Airlines and China Publishing Media 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.