Correlation Between Cameo Communications and China Airlines

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Can any of the company-specific risk be diversified away by investing in both Cameo Communications and China Airlines 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 Cameo Communications and China Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cameo Communications and China Airlines, you can compare the effects of market volatilities on Cameo Communications and China Airlines 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 Cameo Communications with a short position of China Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cameo Communications and China Airlines.

Diversification Opportunities for Cameo Communications and China Airlines

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Cameo and China is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and China Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Airlines and Cameo Communications 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 Cameo Communications are associated (or correlated) with China Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Airlines has no effect on the direction of Cameo Communications i.e., Cameo Communications and China Airlines go up and down completely randomly.

Pair Corralation between Cameo Communications and China Airlines

Assuming the 90 days trading horizon Cameo Communications is expected to generate 1.02 times less return on investment than China Airlines. In addition to that, Cameo Communications is 2.16 times more volatile than China Airlines. It trades about 0.08 of its total potential returns per unit of risk. China Airlines is currently generating about 0.19 per unit of volatility. If you would invest  2,460  in China Airlines on September 25, 2024 and sell it today you would earn a total of  180.00  from holding China Airlines or generate 7.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cameo Communications  vs.  China Airlines

 Performance 
       Timeline  
Cameo Communications 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Cameo Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cameo Communications showed solid returns over the last few months and may actually be approaching a breakup point.
China Airlines 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in China Airlines are ranked lower than 16 (%) 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.

Cameo Communications and China Airlines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cameo Communications and China Airlines

The main advantage of trading using opposite Cameo Communications and China Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cameo Communications position performs unexpectedly, China Airlines 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 Airlines will offset losses from the drop in China Airlines' long position.
The idea behind Cameo Communications and China 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.
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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