Correlation Between CHINA SOUTHN and Aeroports

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

Diversification Opportunities for CHINA SOUTHN and Aeroports

0.15

Correlation Coefficient

CHINA SOUTHN  Aeroports

Average diversification

The 3 months correlation between CHINA and Aeroports is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris 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 Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and Aeroports go up and down completely randomly.

Pair Corralation between CHINA SOUTHN and Aeroports

Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to under-perform the Aeroports. In addition to that, CHINA SOUTHN is 1.76 times more volatile than Aeroports de Paris. It trades about -0.07 of its total potential returns per unit of risk. Aeroports de Paris is currently generating about -0.11 per unit of volatility. If you would invest  11,080  in Aeroports de Paris on December 23, 2024 and sell it today you would lose (1,265) from holding Aeroports de Paris or give up 11.42% of portfolio value over 90 days.

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

CHINA SOUTHN AIR H   vs.  Aeroports de Paris

CHINA SOUTHN AIR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHINA SOUTHN AIR H has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aeroports de Paris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeroports de Paris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CHINA SOUTHN and Aeroports

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

The idea behind CHINA SOUTHN AIR H and Aeroports de Paris 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.