Correlation Between China Southern and China Steel
Can any of the company-specific risk be diversified away by investing in both China Southern 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 China Southern and China Steel 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 China Steel, you can compare the effects of market volatilities on China Southern 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 China Southern with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Southern and China Steel.
Diversification Opportunities for China Southern and China Steel
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and China is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding China Southern Airlines and China Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel 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 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 China Southern i.e., China Southern and China Steel go up and down completely randomly.
Pair Corralation between China Southern and China Steel
If you would invest 2,877 in China Steel on January 26, 2024 and sell it today you would earn a total of 0.00 from holding China Steel or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 1.61% |
| Values | Daily Returns |
China Southern Airlines vs. China Steel
Performance |
| Timeline |
| China Southern Airlines |
| China Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Southern and China Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Southern and China Steel
The main advantage of trading using opposite China Southern and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Southern 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.| China Southern vs. Deutsche Lufthansa AG | China Southern vs. Air France KLM | China Southern vs. Sun Country Airlines |
| China Steel vs. Noble plc | China Steel vs. Hanover Foods | China Steel vs. NH Foods Ltd | China Steel vs. Natural Alternatives International |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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