Correlation Between Air New and Apiam Animal
Can any of the company-specific risk be diversified away by investing in both Air New and Apiam Animal 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 Air New and Apiam Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Apiam Animal Health, you can compare the effects of market volatilities on Air New and Apiam Animal 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 Air New with a short position of Apiam Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Apiam Animal.
Diversification Opportunities for Air New and Apiam Animal
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Apiam is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Apiam Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apiam Animal Health and Air New 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 Air New Zealand are associated (or correlated) with Apiam Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apiam Animal Health has no effect on the direction of Air New i.e., Air New and Apiam Animal go up and down completely randomly.
Pair Corralation between Air New and Apiam Animal
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.28 times more return on investment than Apiam Animal. However, Air New Zealand is 3.57 times less risky than Apiam Animal. It trades about 0.25 of its potential returns per unit of risk. Apiam Animal Health is currently generating about -0.26 per unit of risk. If you would invest 48.00 in Air New Zealand on September 15, 2024 and sell it today you would earn a total of 3.00 from holding Air New Zealand or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Apiam Animal Health
Performance |
| Timeline |
| Air New Zealand |
| Apiam Animal Health |
Air New and Apiam Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Apiam Animal
The main advantage of trading using opposite Air New and Apiam Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Apiam Animal 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 Apiam Animal will offset losses from the drop in Apiam Animal's long position.| Air New vs. Dicker Data | Air New vs. Mirrabooka Investments | Air New vs. Australian Strategic Materials | Air New vs. Diversified United Investment |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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