Correlation Between Aena SA and Industria
Can any of the company-specific risk be diversified away by investing in both Aena SA and Industria 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 Aena SA and Industria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aena SA and Industria de Diseno, you can compare the effects of market volatilities on Aena SA and Industria 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 Aena SA with a short position of Industria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SA and Industria.
Diversification Opportunities for Aena SA and Industria
Poor diversification
The 3 months correlation between Aena and Industria is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aena SA and Industria de Diseno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseno and Aena SA 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 Aena SA are associated (or correlated) with Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseno has no effect on the direction of Aena SA i.e., Aena SA and Industria go up and down completely randomly.
Pair Corralation between Aena SA and Industria
Assuming the 90 days trading horizon Aena SA is expected to generate 1.47 times less return on investment than Industria. But when comparing it to its historical volatility, Aena SA is 1.48 times less risky than Industria. It trades about 0.14 of its potential returns per unit of risk. Industria de Diseno is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,032 in Industria de Diseno on November 3, 2024 and sell it today you would earn a total of 240.00 from holding Industria de Diseno or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aena SA vs. Industria de Diseno
Performance |
| Timeline |
| Aena SA |
| Industria de Diseno |
Aena SA and Industria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aena SA and Industria
The main advantage of trading using opposite Aena SA and Industria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aena SA position performs unexpectedly, Industria 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 Industria will offset losses from the drop in Industria's long position.| Aena SA vs. Home Capital Rentals | Aena SA vs. Tier1 Technology SA | Aena SA vs. Cellnex Telecom SA | Aena SA vs. Squirrel Media SA |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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