Correlation Between Exchange Income and Chorus Aviation

Can any of the company-specific risk be diversified away by investing in both Exchange Income and Chorus Aviation 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 Exchange Income and Chorus Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exchange Income and Chorus Aviation, you can compare the effects of market volatilities on Exchange Income and Chorus Aviation 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 Exchange Income with a short position of Chorus Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Income and Chorus Aviation.

Diversification Opportunities for Exchange Income and Chorus Aviation

0.3

Correlation Coefficient

Exchange Income  Chorus Aviation

Weak diversification

The 3 months correlation between Exchange and Chorus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Income and Chorus Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chorus Aviation and Exchange Income 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 Exchange Income are associated (or correlated) with Chorus Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chorus Aviation has no effect on the direction of Exchange Income i.e., Exchange Income and Chorus Aviation go up and down completely randomly.

Pair Corralation between Exchange Income and Chorus Aviation

Assuming the 90 days trading horizon Exchange Income is expected to under-perform the Chorus Aviation. But the stock apears to be less risky and, when comparing its historical volatility, Exchange Income is 1.27 times less risky than Chorus Aviation. The stock trades about -0.19 of its potential returns per unit of risk. The Chorus Aviation is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,107  in Chorus Aviation on December 28, 2024 and sell it today you would lose (108.00) from holding Chorus Aviation or give up 5.13% of portfolio value over 90 days.

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

Exchange Income  vs.  Chorus Aviation

Exchange Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exchange Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Chorus Aviation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chorus Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Chorus Aviation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Exchange Income and Chorus Aviation

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

The idea behind Exchange Income and Chorus Aviation 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.