Correlation Between China Aircraft and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both China Aircraft and Western Acquisition 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 China Aircraft and Western Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Aircraft Leasing and Western Acquisition Ventures, you can compare the effects of market volatilities on China Aircraft and Western Acquisition 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 China Aircraft with a short position of Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and Western Acquisition.
Diversification Opportunities for China Aircraft and Western Acquisition
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Western is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition and China Aircraft 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 China Aircraft Leasing are associated (or correlated) with Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of China Aircraft i.e., China Aircraft and Western Acquisition go up and down completely randomly.
Pair Corralation between China Aircraft and Western Acquisition
Assuming the 90 days horizon China Aircraft Leasing is expected to generate 2.34 times more return on investment than Western Acquisition. However, China Aircraft is 2.34 times more volatile than Western Acquisition Ventures. It trades about 0.08 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.01 per unit of risk. If you would invest 13.00 in China Aircraft Leasing on September 24, 2024 and sell it today you would earn a total of 27.00 from holding China Aircraft Leasing or generate 207.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
China Aircraft Leasing vs. Western Acquisition Ventures
Performance |
Timeline |
China Aircraft Leasing |
Western Acquisition |
China Aircraft and Western Acquisition Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Aircraft and Western Acquisition
The main advantage of trading using opposite China Aircraft and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.China Aircraft vs. Black Diamond Group | China Aircraft vs. Alta Equipment Group | China Aircraft vs. BOC Aviation Limited | China Aircraft vs. Fortress Transportation and |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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