Correlation Between Aegean Airlines and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and JAPAN 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 Aegean Airlines and JAPAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aegean Airlines SA and JAPAN AIRLINES, you can compare the effects of market volatilities on Aegean Airlines and JAPAN 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 Aegean Airlines with a short position of JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and JAPAN AIRLINES.
Diversification Opportunities for Aegean Airlines and JAPAN AIRLINES
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aegean and JAPAN is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES 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 SA are associated (or correlated) with JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between Aegean Airlines and JAPAN AIRLINES
Assuming the 90 days horizon Aegean Airlines SA is expected to generate 1.77 times more return on investment than JAPAN AIRLINES. However, Aegean Airlines is 1.77 times more volatile than JAPAN AIRLINES. It trades about -0.01 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about -0.06 per unit of risk. If you would invest 1,085 in Aegean Airlines SA on August 28, 2024 and sell it today you would lose (151.00) from holding Aegean Airlines SA or give up 13.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Aegean Airlines SA vs. JAPAN AIRLINES
Performance |
| Timeline |
| Aegean Airlines SA |
| JAPAN AIRLINES |
Aegean Airlines and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegean Airlines and JAPAN AIRLINES
The main advantage of trading using opposite Aegean Airlines and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegean Airlines position performs unexpectedly, JAPAN 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 JAPAN AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.| Aegean Airlines vs. Zoom Video Communications | Aegean Airlines vs. Singapore Telecommunications Limited | Aegean Airlines vs. Ribbon Communications | Aegean Airlines vs. AWILCO DRILLING PLC |
| JAPAN AIRLINES vs. Hyrican Informationssysteme Aktiengesellschaft | JAPAN AIRLINES vs. Sunny Optical Technology | JAPAN AIRLINES vs. INFORMATION SVC GRP | JAPAN AIRLINES vs. NetSol Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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