Correlation Between VIAPLAY GROUP and Air China

Can any of the company-specific risk be diversified away by investing in both VIAPLAY GROUP 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 VIAPLAY GROUP and Air China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VIAPLAY GROUP AB and Air China Limited, you can compare the effects of market volatilities on VIAPLAY GROUP 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 VIAPLAY GROUP with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIAPLAY GROUP and Air China.

Diversification Opportunities for VIAPLAY GROUP and Air China

-0.49

Correlation Coefficient

VIAPLAY GROUP  Air China

Very good diversification

The 3 months correlation between VIAPLAY and Air is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding VIAPLAY GROUP AB and Air China Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China Limited and VIAPLAY GROUP 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 VIAPLAY GROUP AB 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 Limited has no effect on the direction of VIAPLAY GROUP i.e., VIAPLAY GROUP and Air China go up and down completely randomly.

Pair Corralation between VIAPLAY GROUP and Air China

Assuming the 90 days horizon VIAPLAY GROUP is expected to generate 2.43 times less return on investment than Air China. In addition to that, VIAPLAY GROUP is 1.29 times more volatile than Air China Limited. It trades about 0.04 of its total potential returns per unit of risk. Air China Limited is currently generating about 0.11 per unit of volatility. If you would invest  53.00  in Air China Limited on October 7, 2024 and sell it today you would earn a total of  7.00  from holding Air China Limited or generate 13.21% return on investment over 90 days.

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

VIAPLAY GROUP AB  vs.  Air China Limited

VIAPLAY GROUP AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VIAPLAY GROUP AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, VIAPLAY GROUP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Air China Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air China Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Air China reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VIAPLAY GROUP and Air China

The main advantage of trading using opposite VIAPLAY GROUP and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIAPLAY GROUP 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 VIAPLAY GROUP AB and Air China Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.