Correlation Between Air Lease and CEOTRONICS

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

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

Diversification Opportunities for Air Lease and CEOTRONICS

0.57

Correlation Coefficient

Air Lease  CEOTRONICS

Very weak diversification

The 3 months correlation between Air and CEOTRONICS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS 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 CEOTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS has no effect on the direction of Air Lease i.e., Air Lease and CEOTRONICS go up and down completely randomly.

Pair Corralation between Air Lease and CEOTRONICS

Assuming the 90 days trading horizon Air Lease is expected to under-perform the CEOTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, Air Lease is 3.62 times less risky than CEOTRONICS. The stock trades about -0.21 of its potential returns per unit of risk. The CEOTRONICS is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  520.00  in CEOTRONICS on September 24, 2024 and sell it today you would earn a total of  65.00  from holding CEOTRONICS or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Air Lease  vs.  CEOTRONICS

Air Lease

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 12 (%) 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.

CEOTRONICS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CEOTRONICS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and CEOTRONICS

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

The idea behind Air Lease and CEOTRONICS 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.