Correlation Between Fortress Transp and BOC Aviation

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

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

Diversification Opportunities for Fortress Transp and BOC Aviation

-0.64

Correlation Coefficient

Fortress Transp  BOC Aviation

Excellent diversification

The 3 months correlation between Fortress and BOC is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transp Infra and BOC Aviation Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Aviation Limited and Fortress Transp 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 Fortress Transp Infra are associated (or correlated) with BOC Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Aviation Limited has no effect on the direction of Fortress Transp i.e., Fortress Transp and BOC Aviation go up and down completely randomly.

Pair Corralation between Fortress Transp and BOC Aviation

Given the investment horizon of 90 days Fortress Transp Infra is expected to under-perform the BOC Aviation. In addition to that, Fortress Transp is 1.15 times more volatile than BOC Aviation Limited. It trades about -0.3 of its total potential returns per unit of risk. BOC Aviation Limited is currently generating about 0.06 per unit of volatility. If you would invest  784.00  in BOC Aviation Limited on September 17, 2024 and sell it today you would earn a total of  21.00  from holding BOC Aviation Limited or generate 2.68% return on investment over 90 days.

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

Fortress Transp Infra  vs.  BOC Aviation Limited

Fortress Transp Infra

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Transp Infra are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Fortress Transp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Fortress Transp and BOC Aviation

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

The idea behind Fortress Transp Infra and BOC Aviation 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.