Correlation Between Calibre Mining and China Eastern

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

By analyzing existing cross correlation between Calibre Mining Corp and China Eastern Airlines, you can compare the effects of market volatilities on Calibre Mining and China Eastern 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 Calibre Mining with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calibre Mining and China Eastern.

Diversification Opportunities for Calibre Mining and China Eastern

-0.54

Correlation Coefficient

Calibre Mining  China Eastern

Excellent diversification

The 3 months correlation between Calibre and China is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Calibre Mining Corp and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and Calibre Mining 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 Calibre Mining Corp are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Calibre Mining i.e., Calibre Mining and China Eastern go up and down completely randomly.

Pair Corralation between Calibre Mining and China Eastern

Assuming the 90 days trading horizon Calibre Mining Corp is expected to generate 1.28 times more return on investment than China Eastern. However, Calibre Mining is 1.28 times more volatile than China Eastern Airlines. It trades about 0.04 of its potential returns per unit of risk. China Eastern Airlines is currently generating about -0.21 per unit of risk. If you would invest  165.00  in Calibre Mining Corp on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Calibre Mining Corp or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Calibre Mining Corp  vs.  China Eastern Airlines

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

China Eastern Airlines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Eastern Airlines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Eastern reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calibre Mining and China Eastern

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

The idea behind Calibre Mining Corp and China Eastern Airlines 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.