Correlation Between Hainan Airlines and Wintime Energy

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

Diversification Opportunities for Hainan Airlines and Wintime Energy

0.56

Correlation Coefficient

Hainan Airlines  Wintime Energy

Very weak diversification

The 3 months correlation between Hainan and Wintime is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Airlines Co and Wintime Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintime Energy 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 Wintime Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintime Energy has no effect on the direction of Hainan Airlines i.e., Hainan Airlines and Wintime Energy go up and down completely randomly.

Pair Corralation between Hainan Airlines and Wintime Energy

Assuming the 90 days trading horizon Hainan Airlines Co is expected to generate 1.91 times more return on investment than Wintime Energy. However, Hainan Airlines is 1.91 times more volatile than Wintime Energy Co. It trades about -0.07 of its potential returns per unit of risk. Wintime Energy Co is currently generating about -0.21 per unit of risk. If you would invest  32.00  in Hainan Airlines Co on December 25, 2024 and sell it today you would lose (5.00) from holding Hainan Airlines Co or give up 15.62% of portfolio value over 90 days.

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

Hainan Airlines Co  vs.  Wintime Energy Co

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.

Wintime Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wintime Energy 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.

Pair Trading with Hainan Airlines and Wintime Energy

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

The idea behind Hainan Airlines Co and Wintime Energy Co 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.