Correlation Between AEGEAN AIRLINES and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and AIR PRODCHEMICALS 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 AEGEAN AIRLINES and AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and AIR PRODCHEMICALS, you can compare the effects of market volatilities on AEGEAN AIRLINES and AIR PRODCHEMICALS 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 AEGEAN AIRLINES with a short position of AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and AIR PRODCHEMICALS.
Diversification Opportunities for AEGEAN AIRLINES and AIR PRODCHEMICALS
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AEGEAN and AIR is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and AEGEAN AIRLINES 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 AEGEAN AIRLINES are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and AIR PRODCHEMICALS
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 2.04 times more return on investment than AIR PRODCHEMICALS. However, AEGEAN AIRLINES is 2.04 times more volatile than AIR PRODCHEMICALS. It trades about 0.18 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about -0.95 per unit of risk. If you would invest 990.00 in AEGEAN AIRLINES on October 9, 2024 and sell it today you would earn a total of 34.00 from holding AEGEAN AIRLINES or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEGEAN AIRLINES vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| AEGEAN AIRLINES |
| AIR PRODCHEMICALS |
AEGEAN AIRLINES and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and AIR PRODCHEMICALS
The main advantage of trading using opposite AEGEAN AIRLINES and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| AEGEAN AIRLINES vs. SCANDMEDICAL SOLDK 040 | AEGEAN AIRLINES vs. TRI CHEMICAL LABORATINC | AEGEAN AIRLINES vs. ENVVENO MEDICAL DL 00001 | AEGEAN AIRLINES vs. Advanced Medical Solutions |
| AIR PRODCHEMICALS vs. MidCap Financial Investment | AIR PRODCHEMICALS vs. HK Electric Investments | AIR PRODCHEMICALS vs. PennyMac Mortgage Investment | AIR PRODCHEMICALS vs. Tower Semiconductor |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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