Correlation Between China Aircraft and 49326EEL3

Can any of the company-specific risk be diversified away by investing in both China Aircraft and 49326EEL3 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 49326EEL3 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 US49326EEL39, you can compare the effects of market volatilities on China Aircraft and 49326EEL3 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 49326EEL3. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and 49326EEL3.

Diversification Opportunities for China Aircraft and 49326EEL3

0.19

Correlation Coefficient

China Aircraft  49326EEL3

Average diversification

The 3 months correlation between China and 49326EEL3 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and US49326EEL39 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US49326EEL39 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 49326EEL3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US49326EEL39 has no effect on the direction of China Aircraft i.e., China Aircraft and 49326EEL3 go up and down completely randomly.

Pair Corralation between China Aircraft and 49326EEL3

Assuming the 90 days horizon China Aircraft Leasing is expected to under-perform the 49326EEL3. In addition to that, China Aircraft is 3.8 times more volatile than US49326EEL39. It trades about -0.13 of its total potential returns per unit of risk. US49326EEL39 is currently generating about -0.12 per unit of volatility. If you would invest  10,044  in US49326EEL39 on October 6, 2024 and sell it today you would lose (145.00) from holding US49326EEL39 or give up 1.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.87%
Values	Daily Returns

China Aircraft Leasing  vs.  US49326EEL39

China Aircraft Leasing

Risk-Adjusted Performance

0 of 100

Very Weak

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

US49326EEL39

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US49326EEL39 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49326EEL3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Aircraft and 49326EEL3

The main advantage of trading using opposite China Aircraft and 49326EEL3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft position performs unexpectedly, 49326EEL3 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 49326EEL3 will offset losses from the drop in 49326EEL3's long position.

The idea behind China Aircraft Leasing and US49326EEL39 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.