Correlation Between Air Lease and AUST AGRICULTURAL

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

By analyzing existing cross correlation between Air Lease and AUST AGRICULTURAL, you can compare the effects of market volatilities on Air Lease and AUST AGRICULTURAL 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 AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and AUST AGRICULTURAL.

Diversification Opportunities for Air Lease and AUST AGRICULTURAL

-0.26

Correlation Coefficient

Air Lease  AUST AGRICULTURAL

Very good diversification

The 3 months correlation between Air and AUST is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL 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 AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of Air Lease i.e., Air Lease and AUST AGRICULTURAL go up and down completely randomly.

Pair Corralation between Air Lease and AUST AGRICULTURAL

Assuming the 90 days trading horizon Air Lease is expected to generate 1.36 times more return on investment than AUST AGRICULTURAL. However, Air Lease is 1.36 times more volatile than AUST AGRICULTURAL. It trades about 0.19 of its potential returns per unit of risk. AUST AGRICULTURAL is currently generating about 0.02 per unit of risk. If you would invest  3,939  in Air Lease on September 3, 2024 and sell it today you would earn a total of  821.00  from holding Air Lease or generate 20.84% return on investment over 90 days.

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

Air Lease  vs.  AUST AGRICULTURAL

Air Lease

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Air Lease reported solid returns over the last few months and may actually be approaching a breakup point.

AUST AGRICULTURAL

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AUST AGRICULTURAL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AUST AGRICULTURAL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Air Lease and AUST AGRICULTURAL

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

The idea behind Air Lease and AUST AGRICULTURAL 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.