Correlation Between EAST SIDE and AIR CHINA

Can any of the company-specific risk be diversified away by investing in both EAST SIDE and AIR CHINA 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 EAST SIDE and AIR CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EAST SIDE GAMES and AIR CHINA LTD, you can compare the effects of market volatilities on EAST SIDE and AIR CHINA 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 EAST SIDE with a short position of AIR CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAST SIDE and AIR CHINA.

Diversification Opportunities for EAST SIDE and AIR CHINA

0.32

Correlation Coefficient

EAST SIDE  AIR CHINA

Weak diversification

The 3 months correlation between EAST and AIR is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding EAST SIDE GAMES and AIR CHINA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR CHINA LTD and EAST SIDE 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 EAST SIDE GAMES are associated (or correlated) with AIR CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR CHINA LTD has no effect on the direction of EAST SIDE i.e., EAST SIDE and AIR CHINA go up and down completely randomly.

Pair Corralation between EAST SIDE and AIR CHINA

Assuming the 90 days horizon EAST SIDE GAMES is expected to under-perform the AIR CHINA. In addition to that, EAST SIDE is 2.43 times more volatile than AIR CHINA LTD. It trades about -0.04 of its total potential returns per unit of risk. AIR CHINA LTD is currently generating about 0.01 per unit of volatility. If you would invest  1,190  in AIR CHINA LTD on December 20, 2024 and sell it today you would earn a total of  0.00  from holding AIR CHINA LTD or generate 0.0% return on investment over 90 days.

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

EAST SIDE GAMES  vs.  AIR CHINA LTD

EAST SIDE GAMES

Risk-Adjusted Performance

Very Weak

Over the last 90 days EAST SIDE GAMES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AIR CHINA LTD

Risk-Adjusted Performance

Weak

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

Pair Trading with EAST SIDE and AIR CHINA

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

The idea behind EAST SIDE GAMES and AIR CHINA LTD 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.