Correlation Between Copa Holdings and China Eastern
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and China Eastern 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 Copa Holdings and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copa Holdings SA and China Eastern Airlines, you can compare the effects of market volatilities on Copa Holdings and China Eastern 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 Copa Holdings with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and China Eastern.
Diversification Opportunities for Copa Holdings and China Eastern
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Copa and China is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and Copa Holdings 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 Copa Holdings SA are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Copa Holdings i.e., Copa Holdings and China Eastern go up and down completely randomly.
Pair Corralation between Copa Holdings and China Eastern
If you would invest 1,998 in China Eastern Airlines on January 25, 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 | 4.55% |
| Values | Daily Returns |
Copa Holdings SA vs. China Eastern Airlines
Performance |
| Timeline |
| Copa Holdings SA |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Copa Holdings and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and China Eastern
The main advantage of trading using opposite Copa Holdings and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, China Eastern 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 Eastern will offset losses from the drop in China Eastern's long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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