Correlation Between Cimpress and China Southern

Can any of the company-specific risk be diversified away by investing in both Cimpress and China Southern 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 Cimpress and China Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cimpress NV and China Southern Airlines, you can compare the effects of market volatilities on Cimpress and China Southern 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 Cimpress with a short position of China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cimpress and China Southern.

Diversification Opportunities for Cimpress and China Southern

0.08

Correlation Coefficient

Cimpress  China Southern

Significant diversification

The 3 months correlation between Cimpress and China is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cimpress NV and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines and Cimpress 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 Cimpress NV are associated (or correlated) with China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of Cimpress i.e., Cimpress and China Southern go up and down completely randomly.

Pair Corralation between Cimpress and China Southern

Given the investment horizon of 90 days Cimpress is expected to generate 1.14 times less return on investment than China Southern. But when comparing it to its historical volatility, Cimpress NV is 2.13 times less risky than China Southern. It trades about 0.16 of its potential returns per unit of risk. China Southern Airlines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  41.00  in China Southern Airlines on May 6, 2025 and sell it today you would earn a total of  11.00  from holding China Southern Airlines or generate 26.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cimpress NV  vs.  China Southern Airlines

Cimpress NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cimpress NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Cimpress reported solid returns over the last few months and may actually be approaching a breakup point.

China Southern Airlines

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Southern Airlines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, China Southern reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cimpress and China Southern

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

The idea behind Cimpress NV and China Southern 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.