Correlation Between Air China and Kuehne +

Can any of the company-specific risk be diversified away by investing in both Air China and Kuehne + 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 Air China and Kuehne + into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air China Limited and Kuehne Nagel International, you can compare the effects of market volatilities on Air China and Kuehne + 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 Air China with a short position of Kuehne +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air China and Kuehne +.

Diversification Opportunities for Air China and Kuehne +

-0.36

Correlation Coefficient

Air China  Kuehne +

Very good diversification

The 3 months correlation between Air and Kuehne is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Air China Limited and Kuehne Nagel International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuehne Nagel Interna and Air China 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 Air China Limited are associated (or correlated) with Kuehne +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuehne Nagel Interna has no effect on the direction of Air China i.e., Air China and Kuehne + go up and down completely randomly.

Pair Corralation between Air China and Kuehne +

Assuming the 90 days horizon Air China is expected to generate 28.36 times less return on investment than Kuehne +. In addition to that, Air China is 1.48 times more volatile than Kuehne Nagel International. It trades about 0.0 of its total potential returns per unit of risk. Kuehne Nagel International is currently generating about 0.01 per unit of volatility. If you would invest  4,200  in Kuehne Nagel International on December 29, 2024 and sell it today you would earn a total of  20.00  from holding Kuehne Nagel International or generate 0.48% return on investment over 90 days.

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

Air China Limited  vs.  Kuehne Nagel International

Air China Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air China Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Air China is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Kuehne Nagel Interna

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kuehne Nagel International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Kuehne + is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Air China and Kuehne +

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

The idea behind Air China Limited and Kuehne Nagel International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.