Correlation Between CHINA SOUTHN and REINET INVESTMENTS

Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and REINET INVESTMENTS 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 SOUTHN and REINET INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHINA SOUTHN AIR H and REINET INVESTMENTS SCA, you can compare the effects of market volatilities on CHINA SOUTHN and REINET INVESTMENTS 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 SOUTHN with a short position of REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and REINET INVESTMENTS.

Diversification Opportunities for CHINA SOUTHN and REINET INVESTMENTS

0.0

Correlation Coefficient

CHINA SOUTHN  REINET INVESTMENTS

Pay attention - limited upside

The 3 months correlation between CHINA and REINET is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA and CHINA SOUTHN 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 SOUTHN AIR H are associated (or correlated) with REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and REINET INVESTMENTS go up and down completely randomly.

Pair Corralation between CHINA SOUTHN and REINET INVESTMENTS

Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to under-perform the REINET INVESTMENTS. In addition to that, CHINA SOUTHN is 1.17 times more volatile than REINET INVESTMENTS SCA. It trades about 0.0 of its total potential returns per unit of risk. REINET INVESTMENTS SCA is currently generating about 0.03 per unit of volatility. If you would invest  1,804  in REINET INVESTMENTS SCA on October 11, 2024 and sell it today you would earn a total of  556.00  from holding REINET INVESTMENTS SCA or generate 30.82% return on investment over 90 days.

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

CHINA SOUTHN AIR H   vs.  REINET INVESTMENTS SCA

CHINA SOUTHN AIR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA SOUTHN AIR H are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CHINA SOUTHN unveiled solid returns over the last few months and may actually be approaching a breakup point.

REINET INVESTMENTS SCA

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days REINET INVESTMENTS SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, REINET INVESTMENTS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CHINA SOUTHN and REINET INVESTMENTS

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

The idea behind CHINA SOUTHN AIR H and REINET INVESTMENTS SCA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.