Correlation Between Delta Air and China Eastern
Can any of the company-specific risk be diversified away by investing in both Delta Air 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 Delta Air and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and China Eastern Airlines, you can compare the effects of market volatilities on Delta Air 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 Delta Air with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and China Eastern.
Diversification Opportunities for Delta Air and China Eastern
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and China is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines 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 Delta Air 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 Delta Air Lines 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 Delta Air i.e., Delta Air and China Eastern go up and down completely randomly.
Pair Corralation between Delta Air and China Eastern
Considering the 90-day investment horizon Delta Air is expected to generate 1.63 times less return on investment than China Eastern. But when comparing it to its historical volatility, Delta Air Lines is 1.03 times less risky than China Eastern. It trades about 0.03 of its potential returns per unit of risk. China Eastern Airlines is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,588 in China Eastern Airlines on December 30, 2023 and sell it today you would earn a total of 410.00 from holding China Eastern Airlines or generate 25.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 50.61% |
Values | Daily Returns |
Delta Air Lines vs. China Eastern Airlines
Performance |
Timeline |
Delta Air Lines |
China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Delta Air and China Eastern Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Delta Air and China Eastern
The main advantage of trading using opposite Delta Air and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air 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.Delta Air vs. Axalta Coating Systems | Delta Air vs. Ecovyst | Delta Air vs. BRP Inc | Delta Air vs. Ecolab Inc |
China Eastern vs. Global E Online | China Eastern vs. Hanover Foods | China Eastern vs. Albertsons Companies | China Eastern vs. Sligro Food Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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