Correlation Between CHINA SOUTHN and Shyft

Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and Shyft 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 Shyft 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 The Shyft Group, you can compare the effects of market volatilities on CHINA SOUTHN and Shyft 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 Shyft. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and Shyft.

Diversification Opportunities for CHINA SOUTHN and Shyft

-0.29

Correlation Coefficient

CHINA SOUTHN  Shyft

Very good diversification

The 3 months correlation between CHINA and Shyft is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and The Shyft Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyft Group 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 Shyft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shyft Group has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and Shyft go up and down completely randomly.

Pair Corralation between CHINA SOUTHN and Shyft

Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to generate 0.67 times more return on investment than Shyft. However, CHINA SOUTHN AIR H is 1.49 times less risky than Shyft. It trades about 0.14 of its potential returns per unit of risk. The Shyft Group is currently generating about 0.07 per unit of risk. If you would invest  36.00  in CHINA SOUTHN AIR H on October 25, 2024 and sell it today you would earn a total of  9.00  from holding CHINA SOUTHN AIR H or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

CHINA SOUTHN AIR H   vs.  The Shyft Group

CHINA SOUTHN AIR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA SOUTHN AIR H are ranked lower than 11 (%) 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.

Shyft Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Shyft Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shyft reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHINA SOUTHN and Shyft

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

The idea behind CHINA SOUTHN AIR H and The Shyft Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.