Correlation Between China Aircraft and Sun Country

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

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

Diversification Opportunities for China Aircraft and Sun Country

0.01

Correlation Coefficient

China Aircraft  Sun Country

Significant diversification

The 3 months correlation between China and Sun is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines and China Aircraft 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 China Aircraft Leasing are associated (or correlated) with Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of China Aircraft i.e., China Aircraft and Sun Country go up and down completely randomly.

Pair Corralation between China Aircraft and Sun Country

Assuming the 90 days horizon China Aircraft Leasing is expected to generate 1.55 times more return on investment than Sun Country. However, China Aircraft is 1.55 times more volatile than Sun Country Airlines. It trades about 0.07 of its potential returns per unit of risk. Sun Country Airlines is currently generating about -0.02 per unit of risk. If you would invest  12.00  in China Aircraft Leasing on January 31, 2024 and sell it today you would earn a total of  31.00  from holding China Aircraft Leasing or generate 258.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Aircraft Leasing  vs.  Sun Country Airlines

China Aircraft Leasing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Aircraft Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, China Aircraft is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Sun Country Airlines

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Sun Country is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Aircraft and Sun Country

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

The idea behind China Aircraft Leasing and Sun Country Airlines 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..