Correlation Between Hainan Airlines and ZYF Lopsking

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

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

Diversification Opportunities for Hainan Airlines and ZYF Lopsking

-0.24

Correlation Coefficient

Hainan Airlines  ZYF Lopsking

Very good diversification

The 3 months correlation between Hainan and ZYF is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Airlines Co 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 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 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 Hainan Airlines i.e., Hainan Airlines and ZYF Lopsking go up and down completely randomly.

Pair Corralation between Hainan Airlines and ZYF Lopsking

Assuming the 90 days trading horizon Hainan Airlines Co is expected to under-perform the ZYF Lopsking. In addition to that, Hainan Airlines is 1.64 times more volatile than ZYF Lopsking Aluminum. It trades about -0.05 of its total potential returns per unit of risk. ZYF Lopsking Aluminum is currently generating about 0.04 per unit of volatility. If you would invest  531.00  in ZYF Lopsking Aluminum on December 24, 2024 and sell it today you would earn a total of  19.00  from holding ZYF Lopsking Aluminum or generate 3.58% return on investment over 90 days.

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

Hainan Airlines Co  vs.  ZYF Lopsking Aluminum

Hainan Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hainan Airlines Co 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 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ZYF Lopsking is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hainan Airlines and ZYF Lopsking

The main advantage of trading using opposite Hainan Airlines and ZYF Lopsking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hainan Airlines 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 Hainan Airlines Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.