Correlation Between TRAVEL + and China International

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and China International Marine, you can compare the effects of market volatilities on TRAVEL + and China International 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 TRAVEL + with a short position of China International. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and China International.

Diversification Opportunities for TRAVEL + and China International

0.43

Correlation Coefficient

TRAVEL +  China International

Very weak diversification

The 3 months correlation between TRAVEL and China is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and China International Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International and TRAVEL + 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 TRAVEL LEISURE DL 01 are associated (or correlated) with China International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of TRAVEL + i.e., TRAVEL + and China International go up and down completely randomly.

Pair Corralation between TRAVEL + and China International

Assuming the 90 days trading horizon TRAVEL + is expected to generate 3.73 times less return on investment than China International. But when comparing it to its historical volatility, TRAVEL LEISURE DL 01 is 5.66 times less risky than China International. It trades about 0.23 of its potential returns per unit of risk. China International Marine is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  47.00  in China International Marine on April 25, 2025 and sell it today you would earn a total of  41.00  from holding China International Marine or generate 87.23% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  China International Marine

TRAVEL LEISURE DL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

China International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China International Marine are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRAVEL + and China International

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

The idea behind TRAVEL LEISURE DL 01 and China International Marine 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.