Correlation Between China Southern and American Airlines
Can any of the company-specific risk be diversified away by investing in both China Southern and American Airlines 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 Southern and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Southern Airlines and American Airlines Group, you can compare the effects of market volatilities on China Southern and American Airlines 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 Southern with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Southern and American Airlines.
Diversification Opportunities for China Southern and American Airlines
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and American is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Southern Airlines and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and China Southern 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 Southern Airlines are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of China Southern i.e., China Southern and American Airlines go up and down completely randomly.
Pair Corralation between China Southern and American Airlines
If you would invest 3,697 in China Southern Airlines on January 25, 2024 and sell it today you would earn a total of 0.00 from holding China Southern Airlines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
China Southern Airlines vs. American Airlines Group
Performance |
| Timeline |
| China Southern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Airlines |
China Southern and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Southern and American Airlines
The main advantage of trading using opposite China Southern and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Southern position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| China Southern vs. NH Foods Ltd | China Southern vs. Federal Home Loan | China Southern vs. Hanover Foods | China Southern vs. Hf Foods Group |
| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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