Correlation Between China Eastern and Bang Olufsen

Can any of the company-specific risk be diversified away by investing in both China Eastern and Bang Olufsen 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 Bang Olufsen 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 Bang Olufsen, you can compare the effects of market volatilities on China Eastern and Bang Olufsen 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 Bang Olufsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and Bang Olufsen.

Diversification Opportunities for China Eastern and Bang Olufsen

0.38

Correlation Coefficient

China Eastern  Bang Olufsen

Weak diversification

The 3 months correlation between China and Bang is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and Bang Olufsen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bang Olufsen 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 Bang Olufsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bang Olufsen has no effect on the direction of China Eastern i.e., China Eastern and Bang Olufsen go up and down completely randomly.

Pair Corralation between China Eastern and Bang Olufsen

If you would invest  916.00  in Bang Olufsen on January 25, 2024 and sell it today you would earn a total of  29.00  from holding Bang Olufsen or generate 3.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.26%
Values	Daily Returns

China Eastern Airlines  vs.  Bang Olufsen

China Eastern Airlines

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Bang Olufsen

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bang Olufsen are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Bang Olufsen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with China Eastern and Bang Olufsen

The main advantage of trading using opposite China Eastern and Bang Olufsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, Bang Olufsen 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 Bang Olufsen will offset losses from the drop in Bang Olufsen's long position.

The idea behind China Eastern Airlines and Bang Olufsen 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.