Correlation Between AerSale Corp and Orosur Mining

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

By analyzing existing cross correlation between AerSale Corp and Orosur Mining, you can compare the effects of market volatilities on AerSale Corp and Orosur Mining 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 AerSale Corp with a short position of Orosur Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerSale Corp and Orosur Mining.

Diversification Opportunities for AerSale Corp and Orosur Mining

0.53

Correlation Coefficient

AerSale Corp  Orosur Mining

Very weak diversification

The 3 months correlation between AerSale and Orosur is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Orosur Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orosur Mining and AerSale Corp 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 AerSale Corp are associated (or correlated) with Orosur Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orosur Mining has no effect on the direction of AerSale Corp i.e., AerSale Corp and Orosur Mining go up and down completely randomly.

Pair Corralation between AerSale Corp and Orosur Mining

Given the investment horizon of 90 days AerSale Corp is expected to under-perform the Orosur Mining. But the stock apears to be less risky and, when comparing its historical volatility, AerSale Corp is 8.0 times less risky than Orosur Mining. The stock trades about -0.09 of its potential returns per unit of risk. The Orosur Mining is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  7.60  in Orosur Mining on October 11, 2024 and sell it today you would earn a total of  3.40  from holding Orosur Mining or generate 44.74% return on investment over 90 days.

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

AerSale Corp  vs.  Orosur Mining

AerSale Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, AerSale Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Orosur Mining

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with AerSale Corp and Orosur Mining

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

The idea behind AerSale Corp and Orosur Mining 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.