Correlation Between Air Transport and Wenzhou Kangning

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

By analyzing existing cross correlation between Air Transport Services and Wenzhou Kangning Hospital, you can compare the effects of market volatilities on Air Transport and Wenzhou Kangning 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 Transport with a short position of Wenzhou Kangning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Wenzhou Kangning.

Diversification Opportunities for Air Transport and Wenzhou Kangning

0.35

Correlation Coefficient

Air Transport  Wenzhou Kangning

Weak diversification

The 3 months correlation between Air and Wenzhou is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Wenzhou Kangning Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Kangning Hospital and Air Transport 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 Transport Services are associated (or correlated) with Wenzhou Kangning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Kangning Hospital has no effect on the direction of Air Transport i.e., Air Transport and Wenzhou Kangning go up and down completely randomly.

Pair Corralation between Air Transport and Wenzhou Kangning

Assuming the 90 days horizon Air Transport Services is expected to generate 0.24 times more return on investment than Wenzhou Kangning. However, Air Transport Services is 4.18 times less risky than Wenzhou Kangning. It trades about -0.08 of its potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about -0.23 per unit of risk. If you would invest  2,100  in Air Transport Services on December 20, 2024 and sell it today you would lose (60.00) from holding Air Transport Services or give up 2.86% of portfolio value over 90 days.

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

Air Transport Services  vs.  Wenzhou Kangning Hospital

Air Transport Services

Risk-Adjusted Performance

Very Weak

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

Wenzhou Kangning Hospital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wenzhou Kangning Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Air Transport and Wenzhou Kangning

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

The idea behind Air Transport Services and Wenzhou Kangning Hospital 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.