Correlation Between HAVERTY FURNITURE and China Southern

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

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

Diversification Opportunities for HAVERTY FURNITURE and China Southern

0.58

Correlation Coefficient

HAVERTY FURNITURE  China Southern

Very weak diversification

The 3 months correlation between HAVERTY and China is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding HAVERTY FURNITURE A 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 HAVERTY FURNITURE 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 HAVERTY FURNITURE A 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 HAVERTY FURNITURE i.e., HAVERTY FURNITURE and China Southern go up and down completely randomly.

Pair Corralation between HAVERTY FURNITURE and China Southern

Assuming the 90 days trading horizon HAVERTY FURNITURE A is expected to generate 1.55 times more return on investment than China Southern. However, HAVERTY FURNITURE is 1.55 times more volatile than China Southern Airlines. It trades about 0.05 of its potential returns per unit of risk. China Southern Airlines is currently generating about 0.01 per unit of risk. If you would invest  1,650  in HAVERTY FURNITURE A on April 23, 2025 and sell it today you would earn a total of  40.00  from holding HAVERTY FURNITURE A or generate 2.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

HAVERTY FURNITURE A  vs.  China Southern Airlines

HAVERTY FURNITURE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HAVERTY FURNITURE A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, HAVERTY FURNITURE reported solid returns over the last few months and may actually be approaching a breakup point.

China Southern Airlines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Southern Airlines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, China Southern is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HAVERTY FURNITURE and China Southern

The main advantage of trading using opposite HAVERTY FURNITURE and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HAVERTY FURNITURE 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 HAVERTY FURNITURE A 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.