Correlation Between BOC Aviation and Aarons

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

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

Diversification Opportunities for BOC Aviation and Aarons

-0.66

Correlation Coefficient

BOC Aviation  Aarons

Excellent diversification

The 3 months correlation between BOC and Aarons is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BOC Aviation Limited and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons and BOC Aviation 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 BOC Aviation Limited are associated (or correlated) with Aarons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarons has no effect on the direction of BOC Aviation i.e., BOC Aviation and Aarons go up and down completely randomly.

Pair Corralation between BOC Aviation and Aarons

Assuming the 90 days horizon BOC Aviation Limited is expected to under-perform the Aarons. In addition to that, BOC Aviation is 6.49 times more volatile than The Aarons. It trades about -0.06 of its total potential returns per unit of risk. The Aarons is currently generating about 0.25 per unit of volatility. If you would invest  987.00  in The Aarons on September 5, 2024 and sell it today you would earn a total of  22.00  from holding The Aarons or generate 2.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	34.38%
Values	Daily Returns

BOC Aviation Limited  vs.  The Aarons

BOC Aviation Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOC Aviation Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aarons

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days The Aarons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain basic indicators, Aarons may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BOC Aviation and Aarons

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

The idea behind BOC Aviation Limited and The Aarons 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..