Correlation Between American Airlines and China Southern
Can any of the company-specific risk be diversified away by investing in both American Airlines and China Southern 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 American Airlines and China Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and China Southern Airlines, you can compare the effects of market volatilities on American Airlines and China Southern 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 American Airlines with a short position of China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and China Southern.
Diversification Opportunities for American Airlines and China Southern
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and China is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines and American Airlines 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 American Airlines Group are associated (or correlated) with China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of American Airlines i.e., American Airlines and China Southern go up and down completely randomly.
Pair Corralation between American Airlines and China Southern
If you would invest 1,390 in American Airlines Group on February 6, 2024 and sell it today you would earn a total of 7.50 from holding American Airlines Group or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
American Airlines Group vs. China Southern Airlines
Performance |
| Timeline |
| American Airlines |
| China Southern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Airlines and China Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and China Southern
The main advantage of trading using opposite American Airlines and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, China Southern 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 Southern will offset losses from the drop in China Southern's long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
| China Southern vs. Lincoln Electric Holdings | China Southern vs. Timken Company | China Southern vs. Definitive Healthcare Corp | China Southern vs. DataDot Technology Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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