Correlation Between American Airlines and China Eastern
Can any of the company-specific risk be diversified away by investing in both American Airlines 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 American Airlines and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and China Eastern Airlines, you can compare the effects of market volatilities on American Airlines 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 American Airlines with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and China Eastern.
Diversification Opportunities for American Airlines and China Eastern
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and China is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group 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 American Airlines 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 American Airlines Group 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 American Airlines i.e., American Airlines and China Eastern go up and down completely randomly.
Pair Corralation between American Airlines and China Eastern
If you would invest 1,393 in American Airlines Group on January 19, 2024 and sell it today you would earn a total of 9.00 from holding American Airlines Group or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
American Airlines Group vs. China Eastern Airlines
Performance |
| Timeline |
| American Airlines |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Airlines and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and China Eastern
The main advantage of trading using opposite American Airlines and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines 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.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
| China Eastern vs. Scandinavian Tobacco Group | China Eastern vs. Westrock Coffee | China Eastern vs. Fidus Investment Corp | China Eastern vs. SWK Holdings Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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