Correlation Between China Aircraft and Electrovaya Common

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

By analyzing existing cross correlation between China Aircraft Leasing and Electrovaya Common Shares, you can compare the effects of market volatilities on China Aircraft and Electrovaya Common 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 China Aircraft with a short position of Electrovaya Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and Electrovaya Common.

Diversification Opportunities for China Aircraft and Electrovaya Common

0.35

Correlation Coefficient

China Aircraft  Electrovaya Common

Weak diversification

The 3 months correlation between China and Electrovaya is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares and China Aircraft 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 China Aircraft Leasing are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of China Aircraft i.e., China Aircraft and Electrovaya Common go up and down completely randomly.

Pair Corralation between China Aircraft and Electrovaya Common

Assuming the 90 days horizon China Aircraft Leasing is expected to generate 0.61 times more return on investment than Electrovaya Common. However, China Aircraft Leasing is 1.64 times less risky than Electrovaya Common. It trades about 0.13 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about 0.02 per unit of risk. If you would invest  40.00  in China Aircraft Leasing on December 27, 2024 and sell it today you would earn a total of  7.00  from holding China Aircraft Leasing or generate 17.5% return on investment over 90 days.

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

China Aircraft Leasing  vs.  Electrovaya Common Shares

China Aircraft Leasing

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Aircraft Leasing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, China Aircraft reported solid returns over the last few months and may actually be approaching a breakup point.

Electrovaya Common Shares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Electrovaya Common is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Aircraft and Electrovaya Common

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

The idea behind China Aircraft Leasing and Electrovaya Common Shares 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.