Correlation Between Alabama Aircraft and China Steel
Can any of the company-specific risk be diversified away by investing in both Alabama Aircraft and China Steel 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 Alabama Aircraft and China Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alabama Aircraft Industries and China Steel, you can compare the effects of market volatilities on Alabama Aircraft and China Steel 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 Alabama Aircraft with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alabama Aircraft and China Steel.
Diversification Opportunities for Alabama Aircraft and China Steel
-0.97 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alabama and China is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding Alabama Aircraft Industries and China Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel and Alabama Aircraft 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 Alabama Aircraft Industries are associated (or correlated) with China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel has no effect on the direction of Alabama Aircraft i.e., Alabama Aircraft and China Steel go up and down completely randomly.
Pair Corralation between Alabama Aircraft and China Steel
Assuming the 90 days horizon Alabama Aircraft Industries is expected to under-perform the China Steel. In addition to that, Alabama Aircraft is 63.76 times more volatile than China Steel. It trades about -0.09 of its total potential returns per unit of risk. China Steel is currently generating about 0.06 per unit of volatility. If you would invest 2,813 in China Steel on January 19, 2024 and sell it today you would earn a total of 64.00 from holding China Steel or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 47.04% |
| Values | Daily Returns |
Alabama Aircraft Industries vs. China Steel
Performance |
| Timeline |
| Alabama Aircraft Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alabama Aircraft and China Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alabama Aircraft and China Steel
The main advantage of trading using opposite Alabama Aircraft and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alabama Aircraft position performs unexpectedly, China Steel 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 Steel will offset losses from the drop in China Steel's long position.| Alabama Aircraft vs. Ecoloclean Industrs | Alabama Aircraft vs. Lifevantage | Alabama Aircraft vs. Hf Foods Group | Alabama Aircraft vs. Marfrig Global Foods |
| China Steel vs. PACCAR Inc | China Steel vs. Ardelyx | China Steel vs. Visteon Corp | China Steel vs. Shagrir Group Vehicle |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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