Correlation Between Triton International and BOC Aviation

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

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

Diversification Opportunities for Triton International and BOC Aviation

0.19

Correlation Coefficient

Triton International  BOC Aviation

Average diversification

The 3 months correlation between Triton and BOC is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited 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 Triton International 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 Triton International Limited 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 Triton International i.e., Triton International and BOC Aviation go up and down completely randomly.

Pair Corralation between Triton International and BOC Aviation

Assuming the 90 days trading horizon Triton International is expected to generate 3.86 times less return on investment than BOC Aviation. But when comparing it to its historical volatility, Triton International Limited is 7.86 times less risky than BOC Aviation. It trades about 0.08 of its potential returns per unit of risk. BOC Aviation Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  774.00  in BOC Aviation Limited on September 24, 2024 and sell it today you would earn a total of  31.00  from holding BOC Aviation Limited or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Triton International Limited  vs.  BOC Aviation Limited

Triton International

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Triton International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BOC Aviation Limited

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BOC Aviation Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BOC Aviation is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Triton International and BOC Aviation

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

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.