Correlation Between FTAI Aviation and CITIC

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

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

Diversification Opportunities for FTAI Aviation and CITIC

-0.48

Correlation Coefficient

FTAI Aviation  CITIC

Very good diversification

The 3 months correlation between FTAI and CITIC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Limited and FTAI 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 FTAI Aviation Ltd are associated (or correlated) with CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Limited has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and CITIC go up and down completely randomly.

Pair Corralation between FTAI Aviation and CITIC

Assuming the 90 days horizon FTAI Aviation Ltd is expected to generate 0.72 times more return on investment than CITIC. However, FTAI Aviation Ltd is 1.39 times less risky than CITIC. It trades about -0.05 of its potential returns per unit of risk. CITIC Limited is currently generating about -0.15 per unit of risk. If you would invest  2,760  in FTAI Aviation Ltd on December 1, 2024 and sell it today you would lose (94.00) from holding FTAI Aviation Ltd or give up 3.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	70.0%
Values	Daily Returns

FTAI Aviation Ltd  vs.  CITIC Limited

FTAI Aviation

Risk-Adjusted Performance

Very Weak

Over the last 90 days FTAI Aviation Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, FTAI Aviation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

CITIC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days CITIC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FTAI Aviation and CITIC

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

The idea behind FTAI Aviation Ltd and CITIC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.