Correlation Between China Eastern and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both China Eastern and Copa Holdings 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 Eastern and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Eastern Airlines and Copa Holdings SA, you can compare the effects of market volatilities on China Eastern and Copa Holdings 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 Eastern with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and Copa Holdings.
Diversification Opportunities for China Eastern and Copa Holdings
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Copa is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA and China Eastern 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 Eastern Airlines are associated (or correlated) with Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of China Eastern i.e., China Eastern and Copa Holdings go up and down completely randomly.
Pair Corralation between China Eastern and Copa Holdings
If you would invest 1,998 in China Eastern Airlines on January 26, 2024 and sell it today you would earn a total of 0.00 from holding China Eastern Airlines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
China Eastern Airlines vs. Copa Holdings SA
Performance |
| Timeline |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Copa Holdings SA |
China Eastern and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and Copa Holdings
The main advantage of trading using opposite China Eastern and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, Copa Holdings 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 Copa Holdings will offset losses from the drop in Copa Holdings' long position.| China Eastern vs. Cracker Barrel Old | China Eastern vs. JJill Inc | China Eastern vs. Texas Roadhouse | China Eastern vs. Shake Shack |
| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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