Correlation Between Copa Holdings and China Southern
Can any of the company-specific risk be diversified away by investing in both Copa Holdings 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 Copa Holdings and China Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copa Holdings SA and China Southern Airlines, you can compare the effects of market volatilities on Copa Holdings 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 Copa Holdings with a short position of China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and China Southern.
Diversification Opportunities for Copa Holdings and China Southern
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Copa and China is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA 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 Copa Holdings 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 Copa Holdings SA 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 Copa Holdings i.e., Copa Holdings and China Southern go up and down completely randomly.
Pair Corralation between Copa Holdings and China Southern
Considering the 90-day investment horizon Copa Holdings SA is expected to generate 0.21 times more return on investment than China Southern. However, Copa Holdings SA is 4.66 times less risky than China Southern. It trades about 0.1 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 10,473 in Copa Holdings SA on June 11, 2025 and sell it today you would earn a total of 938.00 from holding Copa Holdings SA or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. China Southern Airlines
Performance |
| Timeline |
| Copa Holdings SA |
| China Southern Airlines |
Copa Holdings and China Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and China Southern
The main advantage of trading using opposite Copa Holdings and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings 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.| Copa Holdings vs. Allegiant Travel | Copa Holdings vs. Alaska Air Group | Copa Holdings vs. International Consolidated Airlines | Copa Holdings vs. Ryanair Holdings PLC |
| China Southern vs. Cebu Air | China Southern vs. Finnair Oyj | China Southern vs. easyJet plc | China Southern vs. Norse Atlantic ASA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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