Correlation Between BOC Aviation and Triton International

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

By analyzing existing cross correlation between BOC Aviation Limited and Triton International Limited, you can compare the effects of market volatilities on BOC Aviation and Triton 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 BOC Aviation with a short position of Triton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOC Aviation and Triton International.

Diversification Opportunities for BOC Aviation and Triton International

-0.03

Correlation Coefficient

BOC Aviation  Triton International

Good diversification

The 3 months correlation between BOC and Triton is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BOC Aviation Limited and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International and BOC Aviation 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 BOC Aviation Limited are associated (or correlated) with Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of BOC Aviation i.e., BOC Aviation and Triton International go up and down completely randomly.

Pair Corralation between BOC Aviation and Triton International

Assuming the 90 days horizon BOC Aviation Limited is expected to under-perform the Triton International. In addition to that, BOC Aviation is 8.72 times more volatile than Triton International Limited. It trades about -0.04 of its total potential returns per unit of risk. Triton International Limited is currently generating about 0.07 per unit of volatility. If you would invest  2,524  in Triton International Limited on September 17, 2024 and sell it today you would earn a total of  36.00  from holding Triton International Limited or generate 1.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

BOC Aviation Limited  vs.  Triton International Limited

BOC Aviation Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOC Aviation Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Triton International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Triton International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BOC Aviation and Triton International

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

The idea behind BOC Aviation Limited and Triton International Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.