Correlation Between FTAI Aviation and DigiAsia Corp

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

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

Diversification Opportunities for FTAI Aviation and DigiAsia Corp

0.07

Correlation Coefficient

FTAI Aviation  DigiAsia Corp

Significant diversification

The 3 months correlation between FTAI and DigiAsia is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and DigiAsia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiAsia Corp and FTAI 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 FTAI Aviation Ltd are associated (or correlated) with DigiAsia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiAsia Corp has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and DigiAsia Corp go up and down completely randomly.

Pair Corralation between FTAI Aviation and DigiAsia Corp

Assuming the 90 days horizon FTAI Aviation is expected to generate 29.7 times less return on investment than DigiAsia Corp. But when comparing it to its historical volatility, FTAI Aviation Ltd is 27.97 times less risky than DigiAsia Corp. It trades about 0.09 of its potential returns per unit of risk. DigiAsia Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6.66  in DigiAsia Corp on September 15, 2024 and sell it today you would lose (0.16) from holding DigiAsia Corp or give up 2.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

FTAI Aviation Ltd  vs.  DigiAsia Corp

FTAI Aviation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Aviation Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, FTAI Aviation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

DigiAsia Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DigiAsia Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, DigiAsia Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTAI Aviation and DigiAsia Corp

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

The idea behind FTAI Aviation Ltd and DigiAsia Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.