Correlation Between China Southern and Kolibri Global

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Can any of the company-specific risk be diversified away by investing in both China Southern and Kolibri Global 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 Southern and Kolibri Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Southern Airlines and Kolibri Global Energy, you can compare the effects of market volatilities on China Southern and Kolibri Global 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 Southern with a short position of Kolibri Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Southern and Kolibri Global.

Diversification Opportunities for China Southern and Kolibri Global

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between China and Kolibri is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding China Southern Airlines and Kolibri Global Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolibri Global Energy and China Southern 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 Southern Airlines are associated (or correlated) with Kolibri Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolibri Global Energy has no effect on the direction of China Southern i.e., China Southern and Kolibri Global go up and down completely randomly.

Pair Corralation between China Southern and Kolibri Global

Assuming the 90 days horizon China Southern Airlines is expected to under-perform the Kolibri Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, China Southern Airlines is 1.06 times less risky than Kolibri Global. The pink sheet trades about -0.25 of its potential returns per unit of risk. The Kolibri Global Energy is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  573.00  in Kolibri Global Energy on October 26, 2024 and sell it today you would earn a total of  174.00  from holding Kolibri Global Energy or generate 30.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy94.74%
ValuesDaily Returns

China Southern Airlines  vs.  Kolibri Global Energy

 Performance 
       Timeline  
China Southern Airlines 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in China Southern Airlines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, China Southern reported solid returns over the last few months and may actually be approaching a breakup point.
Kolibri Global Energy 

Risk-Adjusted Performance

37 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Kolibri Global Energy are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Kolibri Global demonstrated solid returns over the last few months and may actually be approaching a breakup point.

China Southern and Kolibri Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Southern and Kolibri Global

The main advantage of trading using opposite China Southern and Kolibri Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Southern position performs unexpectedly, Kolibri Global 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 Kolibri Global will offset losses from the drop in Kolibri Global's long position.
The idea behind China Southern Airlines and Kolibri Global Energy 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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