Correlation Between Hainan Airlines and Guangzhou Boji

Can any of the company-specific risk be diversified away by investing in both Hainan Airlines and Guangzhou Boji 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 Guangzhou Boji 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 Guangzhou Boji Medical, you can compare the effects of market volatilities on Hainan Airlines and Guangzhou Boji 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 Guangzhou Boji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Airlines and Guangzhou Boji.

Diversification Opportunities for Hainan Airlines and Guangzhou Boji

-0.71

Correlation Coefficient

Hainan Airlines  Guangzhou Boji

Pay attention - limited upside

The 3 months correlation between Hainan and Guangzhou is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Airlines Co and Guangzhou Boji Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Boji Medical 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 Guangzhou Boji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Boji Medical has no effect on the direction of Hainan Airlines i.e., Hainan Airlines and Guangzhou Boji go up and down completely randomly.

Pair Corralation between Hainan Airlines and Guangzhou Boji

Assuming the 90 days trading horizon Hainan Airlines Co is expected to under-perform the Guangzhou Boji. In addition to that, Hainan Airlines is 1.12 times more volatile than Guangzhou Boji Medical. It trades about -0.09 of its total potential returns per unit of risk. Guangzhou Boji Medical is currently generating about 0.05 per unit of volatility. If you would invest  902.00  in Guangzhou Boji Medical on December 26, 2024 and sell it today you would earn a total of  61.00  from holding Guangzhou Boji Medical or generate 6.76% return on investment over 90 days.

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

Hainan Airlines Co  vs.  Guangzhou Boji Medical

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Guangzhou Boji Medical

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Hainan Airlines and Guangzhou Boji

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

The idea behind Hainan Airlines Co and Guangzhou Boji Medical 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.