Correlation Between AEGEAN AIRLINES and NEXANS
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and NEXANS 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 NEXANS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and NEXANS, you can compare the effects of market volatilities on AEGEAN AIRLINES and NEXANS 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 NEXANS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and NEXANS.
Diversification Opportunities for AEGEAN AIRLINES and NEXANS
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AEGEAN and NEXANS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and NEXANS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXANS 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 NEXANS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXANS has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and NEXANS go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and NEXANS
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 3.51 times less return on investment than NEXANS. But when comparing it to its historical volatility, AEGEAN AIRLINES is 1.2 times less risky than NEXANS. It trades about 0.03 of its potential returns per unit of risk. NEXANS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,452 in NEXANS on September 21, 2024 and sell it today you would earn a total of 3,928 from holding NEXANS or generate 60.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEGEAN AIRLINES vs. NEXANS
Performance |
| Timeline |
| AEGEAN AIRLINES |
| NEXANS |
AEGEAN AIRLINES and NEXANS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and NEXANS
The main advantage of trading using opposite AEGEAN AIRLINES and NEXANS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, NEXANS 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 NEXANS will offset losses from the drop in NEXANS's long position.| AEGEAN AIRLINES vs. CN MODERN DAIRY | AEGEAN AIRLINES vs. Performance Food Group | AEGEAN AIRLINES vs. Austevoll Seafood ASA | AEGEAN AIRLINES vs. AUSTEVOLL SEAFOOD |
| NEXANS vs. AEGEAN AIRLINES | NEXANS vs. DALATA HOTEL | NEXANS vs. Pebblebrook Hotel Trust | NEXANS vs. Meli Hotels International |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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