Correlation Between AerCap Holdings and China Aircraft

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

By analyzing existing cross correlation between AerCap Holdings NV and China Aircraft Leasing, you can compare the effects of market volatilities on AerCap Holdings and China Aircraft 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 AerCap Holdings with a short position of China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and China Aircraft.

Diversification Opportunities for AerCap Holdings and China Aircraft

Good diversification

The 3 months correlation between AerCap and China is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing and AerCap Holdings 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 AerCap Holdings NV are associated (or correlated) with China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and China Aircraft go up and down completely randomly.

Pair Corralation between AerCap Holdings and China Aircraft

If you would invest  5,953  in AerCap Holdings NV on September 2, 2023 and sell it today you would earn a total of  869.00  from holding AerCap Holdings NV or generate 14.6% return on investment over 90 days.

AerCap Holdings NV  vs.  China Aircraft Leasing

AerCap Holdings NV

AerCap Performance

9 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, AerCap Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

China Aircraft Leasing

China Performance

1 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in China Aircraft Leasing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, China Aircraft may actually be approaching a critical reversion point that can send shares even higher in January 2024.

Pair Trading with AerCap Holdings and China Aircraft

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

The idea behind AerCap Holdings NV and China Aircraft Leasing 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.