Correlation Between AEGEAN AIRLINES and KHD Humboldt
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and KHD Humboldt 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 KHD Humboldt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and KHD Humboldt Wedag, you can compare the effects of market volatilities on AEGEAN AIRLINES and KHD Humboldt 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 KHD Humboldt. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and KHD Humboldt.
Diversification Opportunities for AEGEAN AIRLINES and KHD Humboldt
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AEGEAN and KHD is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and KHD Humboldt Wedag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHD Humboldt Wedag 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 KHD Humboldt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHD Humboldt Wedag has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and KHD Humboldt go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and KHD Humboldt
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to under-perform the KHD Humboldt. But the stock apears to be less risky and, when comparing its historical volatility, AEGEAN AIRLINES is 2.29 times less risky than KHD Humboldt. The stock trades about -0.2 of its potential returns per unit of risk. The KHD Humboldt Wedag is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 860.00 in KHD Humboldt Wedag on August 27, 2024 and sell it today you would earn a total of 20.00 from holding KHD Humboldt Wedag or generate 2.33% 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. KHD Humboldt Wedag
Performance |
| Timeline |
| AEGEAN AIRLINES |
| KHD Humboldt Wedag |
AEGEAN AIRLINES and KHD Humboldt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and KHD Humboldt
The main advantage of trading using opposite AEGEAN AIRLINES and KHD Humboldt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, KHD Humboldt 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 KHD Humboldt will offset losses from the drop in KHD Humboldt's long position.| AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Microsoft |
| KHD Humboldt vs. Western Copper and | KHD Humboldt vs. AEGEAN AIRLINES | KHD Humboldt vs. WESTLAKE CHEMICAL | KHD Humboldt vs. Gol Intelligent Airlines |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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