Correlation Between Hainan Airlines and Xiamen Amoytop

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

Diversification Opportunities for Hainan Airlines and Xiamen Amoytop

-0.4

Correlation Coefficient

Hainan Airlines  Xiamen Amoytop

Very good diversification

The 3 months correlation between Hainan and Xiamen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Airlines Co and Xiamen Amoytop Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Amoytop Biotech 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 Xiamen Amoytop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Amoytop Biotech has no effect on the direction of Hainan Airlines i.e., Hainan Airlines and Xiamen Amoytop go up and down completely randomly.

Pair Corralation between Hainan Airlines and Xiamen Amoytop

Assuming the 90 days trading horizon Hainan Airlines Co is expected to under-perform the Xiamen Amoytop. In addition to that, Hainan Airlines is 1.76 times more volatile than Xiamen Amoytop Biotech. It trades about -0.09 of its total potential returns per unit of risk. Xiamen Amoytop Biotech is currently generating about 0.08 per unit of volatility. If you would invest  7,400  in Xiamen Amoytop Biotech on December 26, 2024 and sell it today you would earn a total of  550.00  from holding Xiamen Amoytop Biotech or generate 7.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Hainan Airlines Co  vs.  Xiamen Amoytop Biotech

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.

Xiamen Amoytop Biotech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Amoytop Biotech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen Amoytop may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hainan Airlines and Xiamen Amoytop

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

The idea behind Hainan Airlines Co and Xiamen Amoytop Biotech 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.