Correlation Between SOS and American Airlines
Can any of the company-specific risk be diversified away by investing in both SOS and American Airlines 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 SOS and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOS LTD A and American Airlines Group, you can compare the effects of market volatilities on SOS and American Airlines 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 SOS with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOS and American Airlines.
Diversification Opportunities for SOS and American Airlines
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between SOS and American is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SOS LTD A and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and SOS 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 SOS LTD A are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of SOS i.e., SOS and American Airlines go up and down completely randomly.
Pair Corralation between SOS and American Airlines
Assuming the 90 days horizon SOS LTD A is expected to generate 1.72 times more return on investment than American Airlines. However, SOS is 1.72 times more volatile than American Airlines Group. It trades about 0.13 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.01 per unit of risk. If you would invest 665.00 in SOS LTD A on November 4, 2024 and sell it today you would earn a total of 45.00 from holding SOS LTD A or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 54.55% |
| Values | Daily Returns |
SOS LTD A vs. American Airlines Group
Performance |
| Timeline |
| SOS LTD A |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| American Airlines |
SOS and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOS and American Airlines
The main advantage of trading using opposite SOS and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOS position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| SOS vs. Inspire Medical Systems | SOS vs. Avanos Medical | SOS vs. Singapore Telecommunications Limited | SOS vs. CompuGroup Medical SE |
| American Airlines vs. De Grey Mining | American Airlines vs. NAGOYA RAILROAD | American Airlines vs. EVS Broadcast Equipment | American Airlines vs. COPLAND ROAD CAPITAL |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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