Correlation Between China Southern and 65339KCP3

Can any of the company-specific risk be diversified away by investing in both China Southern and 65339KCP3 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 65339KCP3 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 NEE 505 28 FEB 33, you can compare the effects of market volatilities on China Southern and 65339KCP3 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 65339KCP3. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Southern and 65339KCP3.

Diversification Opportunities for China Southern and 65339KCP3

-0.2

Correlation Coefficient

China Southern  65339KCP3

Good diversification

The 3 months correlation between China and 65339KCP3 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Southern Airlines and NEE 505 28 FEB 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEE 505 28 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 65339KCP3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEE 505 28 has no effect on the direction of China Southern i.e., China Southern and 65339KCP3 go up and down completely randomly.

Pair Corralation between China Southern and 65339KCP3

Assuming the 90 days horizon China Southern Airlines is expected to generate 6.45 times more return on investment than 65339KCP3. However, China Southern is 6.45 times more volatile than NEE 505 28 FEB 33. It trades about 0.05 of its potential returns per unit of risk. NEE 505 28 FEB 33 is currently generating about -0.05 per unit of risk. If you would invest  33.00  in China Southern Airlines on October 25, 2024 and sell it today you would earn a total of  12.00  from holding China Southern Airlines or generate 36.36% return on investment over 90 days.

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

China Southern Airlines  vs.  NEE 505 28 FEB 33

China Southern Airlines

Risk-Adjusted Performance

5 of 100

OK

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.

NEE 505 28

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEE 505 28 FEB 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NEE 505 28 FEB 33 investors.

Pair Trading with China Southern and 65339KCP3

The main advantage of trading using opposite China Southern and 65339KCP3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Southern position performs unexpectedly, 65339KCP3 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 65339KCP3 will offset losses from the drop in 65339KCP3's long position.

The idea behind China Southern Airlines and NEE 505 28 FEB 33 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.