Correlation Between AMERCO and China Aircraft

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

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

Diversification Opportunities for AMERCO and China Aircraft

Pay attention - limited upside

The 3 months correlation between AMERCO and China is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding AMERCO 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 AMERCO 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 AMERCO 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 AMERCO i.e., AMERCO and China Aircraft go up and down completely randomly.

Pair Corralation between AMERCO and China Aircraft

If you would invest  45.00  in China Aircraft Leasing on September 9, 2023 and sell it today you would earn a total of  0.00  from holding China Aircraft Leasing or generate 0.0% return on investment over 90 days.

AMERCO  vs.  China Aircraft Leasing

AMERCO

AMERCO Performance

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Over the last 90 days AMERCO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat inconsistent essential indicators, AMERCO sustained solid returns over the last few months and may actually be approaching a breakup point.

China Aircraft Leasing

China Performance

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Over the last 90 days China Aircraft Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AMERCO and China Aircraft

The main advantage of trading using opposite AMERCO and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERCO 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 AMERCO 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 Stocks Directory module to find actively traded stocks across global markets.