Correlation Between China Aircraft and CITIC
Can any of the company-specific risk be diversified away by investing in both China Aircraft 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 China Aircraft and CITIC 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 CITIC Limited, you can compare the effects of market volatilities on China Aircraft 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 China Aircraft with a short position of CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and CITIC.
Diversification Opportunities for China Aircraft and CITIC
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and CITIC is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Limited 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 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 China Aircraft i.e., China Aircraft and CITIC go up and down completely randomly.
Pair Corralation between China Aircraft and CITIC
Assuming the 90 days horizon China Aircraft Leasing is expected to generate 0.53 times more return on investment than CITIC. However, China Aircraft Leasing is 1.87 times less risky than CITIC. It trades about 0.08 of its potential returns per unit of risk. CITIC Limited is currently generating about 0.04 per unit of risk. If you would invest 13.00 in China Aircraft Leasing on September 3, 2024 and sell it today you would earn a total of 27.00 from holding China Aircraft Leasing or generate 207.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 67.47% |
| Values | Daily Returns |
China Aircraft Leasing vs. CITIC Limited
Performance |
| Timeline |
| China Aircraft Leasing |
| CITIC Limited |
China Aircraft and CITIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Aircraft and CITIC
The main advantage of trading using opposite China Aircraft and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft 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.| China Aircraft vs. United Rentals | China Aircraft vs. Ashtead Gro | China Aircraft vs. Ashtead Group plc | China Aircraft vs. AerCap Holdings NV |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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