Correlation Between Boeing and China Health
Can any of the company-specific risk be diversified away by investing in both Boeing and China Health 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 Boeing and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and China Health Management, you can compare the effects of market volatilities on Boeing and China Health 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 Boeing with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and China Health.
Diversification Opportunities for Boeing and China Health
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boeing and China is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and China Health Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Management and Boeing 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 The Boeing are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Management has no effect on the direction of Boeing i.e., Boeing and China Health go up and down completely randomly.
Pair Corralation between Boeing and China Health
Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.1 times more return on investment than China Health. However, The Boeing is 10.14 times less risky than China Health. It trades about -0.59 of its potential returns per unit of risk. China Health Management is currently generating about -0.06 per unit of risk. If you would invest 19,299 in The Boeing on January 28, 2024 and sell it today you would lose (2,577) from holding The Boeing or give up 13.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Boeing vs. China Health Management
Performance |
Timeline |
Boeing |
China Health Management |
Boeing and China Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boeing and China Health
The main advantage of trading using opposite Boeing and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, China Health 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 Health will offset losses from the drop in China Health's long position.Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
China Health vs. Ackroo Inc | China Health vs. CurrentC Power | China Health vs. Auddia Inc | China Health vs. Agent Information Software |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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