Correlation Between Air Lease and China Resources
Can any of the company-specific risk be diversified away by investing in both Air Lease and China Resources 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 Air Lease and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and China Resources Power, you can compare the effects of market volatilities on Air Lease and China Resources 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 Air Lease with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and China Resources.
Diversification Opportunities for Air Lease and China Resources
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and China is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and China Resources Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Power and Air Lease 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 Air Lease are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Power has no effect on the direction of Air Lease i.e., Air Lease and China Resources go up and down completely randomly.
Pair Corralation between Air Lease and China Resources
Assuming the 90 days trading horizon Air Lease is expected to generate 0.89 times more return on investment than China Resources. However, Air Lease is 1.13 times less risky than China Resources. It trades about 0.09 of its potential returns per unit of risk. China Resources Power is currently generating about -0.11 per unit of risk. If you would invest 4,041 in Air Lease on October 14, 2024 and sell it today you would earn a total of 339.00 from holding Air Lease or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. China Resources Power
Performance |
| Timeline |
| Air Lease |
| China Resources Power |
Air Lease and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and China Resources
The main advantage of trading using opposite Air Lease and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Air Lease vs. Entravision Communications | Air Lease vs. EAT WELL INVESTMENT | Air Lease vs. Rocket Internet SE | Air Lease vs. COMPUTERSHARE |
| China Resources vs. Air Lease | China Resources vs. Lamar Advertising | China Resources vs. Luckin Coffee | China Resources vs. Lendlease Group |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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