Correlation Between China Eastern and Hawaiian Holdings
Can any of the company-specific risk be diversified away by investing in both China Eastern and Hawaiian 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 Hawaiian 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 Hawaiian Holdings, you can compare the effects of market volatilities on China Eastern and Hawaiian 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 Hawaiian Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and Hawaiian Holdings.
Diversification Opportunities for China Eastern and Hawaiian Holdings
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Hawaiian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and Hawaiian Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Holdings 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 Hawaiian Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Holdings has no effect on the direction of China Eastern i.e., China Eastern and Hawaiian Holdings go up and down completely randomly.
Pair Corralation between China Eastern and Hawaiian Holdings
Considering the 90-day investment horizon China Eastern is expected to generate 1.75 times less return on investment than Hawaiian Holdings. But when comparing it to its historical volatility, China Eastern Airlines is 4.06 times less risky than Hawaiian Holdings. It trades about 0.05 of its potential returns per unit of risk. Hawaiian Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,704 in Hawaiian Holdings on January 17, 2024 and sell it today you would lose (377.00) from holding Hawaiian Holdings or give up 22.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 48.28% |
| Values | Daily Returns |
China Eastern Airlines vs. Hawaiian Holdings
Performance |
| Timeline |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hawaiian Holdings |
China Eastern and Hawaiian Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and Hawaiian Holdings
The main advantage of trading using opposite China Eastern and Hawaiian Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, Hawaiian 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 Hawaiian Holdings will offset losses from the drop in Hawaiian Holdings' long position.| China Eastern vs. Datadog | China Eastern vs. Cadence Design Systems | China Eastern vs. Pearson PLC ADR | China Eastern vs. Definitive Healthcare Corp |
| Hawaiian Holdings vs. Southwest Airlines | Hawaiian Holdings vs. JetBlue Airways Corp | Hawaiian Holdings vs. United Airlines Holdings | Hawaiian Holdings vs. Delta Air Lines |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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