Correlation Between China Aircraft and Triton International

Can any of the company-specific risk be diversified away by investing in both China Aircraft 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 China Aircraft and Triton International 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 Triton International Limited, you can compare the effects of market volatilities on China Aircraft 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 China Aircraft with a short position of Triton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and Triton International.

Diversification Opportunities for China Aircraft and Triton International

0.0

Correlation Coefficient

China Aircraft  Triton International

Pay attention - limited upside

The 3 months correlation between China and Triton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International 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 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 China Aircraft i.e., China Aircraft and Triton International go up and down completely randomly.

Pair Corralation between China Aircraft and Triton International

Assuming the 90 days horizon China Aircraft Leasing is expected to generate 3.86 times more return on investment than Triton International. However, China Aircraft is 3.86 times more volatile than Triton International Limited. It trades about 0.13 of its potential returns per unit of risk. Triton International Limited is currently generating about 0.01 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	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Aircraft Leasing  vs.  Triton International Limited

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.

Triton International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Triton International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Triton International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with China Aircraft and Triton International

The main advantage of trading using opposite China Aircraft and Triton International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft 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 China Aircraft Leasing 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.