Correlation Between Fortress Transportation and BOC Aviation

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

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

Diversification Opportunities for Fortress Transportation and BOC Aviation

-0.21

Correlation Coefficient

Fortress Transportation  BOC Aviation

Very good diversification

The 3 months correlation between Fortress and BOC is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transportation and and BOC Aviation Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Aviation Limited and Fortress Transportation 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 Fortress Transportation and are associated (or correlated) with BOC Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Aviation Limited has no effect on the direction of Fortress Transportation i.e., Fortress Transportation and BOC Aviation go up and down completely randomly.

Pair Corralation between Fortress Transportation and BOC Aviation

Assuming the 90 days horizon Fortress Transportation and is expected to generate 0.19 times more return on investment than BOC Aviation. However, Fortress Transportation and is 5.24 times less risky than BOC Aviation. It trades about 0.06 of its potential returns per unit of risk. BOC Aviation Limited is currently generating about -0.1 per unit of risk. If you would invest  2,505  in Fortress Transportation and on September 2, 2024 and sell it today you would earn a total of  45.00  from holding Fortress Transportation and or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Fortress Transportation and  vs.  BOC Aviation Limited

Fortress Transportation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Transportation and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Fortress Transportation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fortress Transportation and BOC Aviation

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

The idea behind Fortress Transportation and and BOC Aviation Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.