Correlation Between AerSale Corp and Corporacion America

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

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

Diversification Opportunities for AerSale Corp and Corporacion America

-0.47

Correlation Coefficient

AerSale Corp  Corporacion America

Very good diversification

The 3 months correlation between AerSale and Corporacion is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America and AerSale Corp 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 AerSale Corp are associated (or correlated) with Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of AerSale Corp i.e., AerSale Corp and Corporacion America go up and down completely randomly.

Pair Corralation between AerSale Corp and Corporacion America

Given the investment horizon of 90 days AerSale Corp is expected to generate 2.69 times more return on investment than Corporacion America. However, AerSale Corp is 2.69 times more volatile than Corporacion America Airports. It trades about 0.22 of its potential returns per unit of risk. Corporacion America Airports is currently generating about 0.45 per unit of risk. If you would invest  670.00  in AerSale Corp on February 22, 2024 and sell it today you would earn a total of  95.00  from holding AerSale Corp or generate 14.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AerSale Corp  vs.  Corporacion America Airports

AerSale Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AerSale Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Corporacion America

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Corporacion America reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AerSale Corp and Corporacion America

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

The idea behind AerSale Corp and Corporacion America Airports 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.