Correlation Between Virgin Australia and China Eastern

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Can any of the company-specific risk be diversified away by investing in both Virgin Australia 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 Virgin Australia and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Australia Holdings and China Eastern Airlines, you can compare the effects of market volatilities on Virgin Australia 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 Virgin Australia with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Australia and China Eastern.

Diversification Opportunities for Virgin Australia and China Eastern

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Virgin and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Australia Holdings 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 Virgin Australia 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 Virgin Australia Holdings 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 Virgin Australia i.e., Virgin Australia and China Eastern go up and down completely randomly.

Pair Corralation between Virgin Australia and China Eastern

If you would invest  1,588  in China Eastern Airlines on December 30, 2023 and sell it today you would earn a total of  410.00  from holding China Eastern Airlines or generate 25.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Virgin Australia Holdings  vs.  China Eastern Airlines

 Performance 
       Timeline  
Virgin Australia Holdings 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Virgin Australia Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Virgin Australia is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
China Eastern Airlines 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days China Eastern Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, China Eastern is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Virgin Australia and China Eastern Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Virgin Australia and China Eastern

The main advantage of trading using opposite Virgin Australia and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Australia 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.
The idea behind Virgin Australia Holdings and China Eastern Airlines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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