Correlation Between Air Lease and FUYO GENERAL

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

By analyzing existing cross correlation between Air Lease and FUYO GENERAL LEASE, you can compare the effects of market volatilities on Air Lease and FUYO GENERAL 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 Air Lease with a short position of FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and FUYO GENERAL.

Diversification Opportunities for Air Lease and FUYO GENERAL

0.6

Correlation Coefficient

Air Lease  FUYO GENERAL

Poor diversification

The 3 months correlation between Air and FUYO is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE and Air Lease 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 Air Lease are associated (or correlated) with FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of Air Lease i.e., Air Lease and FUYO GENERAL go up and down completely randomly.

Pair Corralation between Air Lease and FUYO GENERAL

Assuming the 90 days trading horizon Air Lease is expected to generate 1.24 times more return on investment than FUYO GENERAL. However, Air Lease is 1.24 times more volatile than FUYO GENERAL LEASE. It trades about 0.06 of its potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about -0.02 per unit of risk. If you would invest  3,608  in Air Lease on October 7, 2024 and sell it today you would earn a total of  992.00  from holding Air Lease or generate 27.49% return on investment over 90 days.

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

Air Lease  vs.  FUYO GENERAL LEASE

Air Lease

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Air Lease reported solid returns over the last few months and may actually be approaching a breakup point.

FUYO GENERAL LEASE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FUYO GENERAL LEASE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FUYO GENERAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Air Lease and FUYO GENERAL

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

The idea behind Air Lease and FUYO GENERAL LEASE 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.