Correlation Between Air New and Pro Medicus
Can any of the company-specific risk be diversified away by investing in both Air New and Pro Medicus 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 Pro Medicus 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 Pro Medicus, you can compare the effects of market volatilities on Air New and Pro Medicus 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 Pro Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Pro Medicus.
Diversification Opportunities for Air New and Pro Medicus
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Pro is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Pro Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Medicus 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 Pro Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Medicus has no effect on the direction of Air New i.e., Air New and Pro Medicus go up and down completely randomly.
Pair Corralation between Air New and Pro Medicus
Assuming the 90 days trading horizon Air New is expected to generate 103.96 times less return on investment than Pro Medicus. But when comparing it to its historical volatility, Air New Zealand is 1.6 times less risky than Pro Medicus. It trades about 0.01 of its potential returns per unit of risk. Pro Medicus is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 15,189 in Pro Medicus on September 3, 2024 and sell it today you would earn a total of 10,000 from holding Pro Medicus or generate 65.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Pro Medicus
Performance |
| Timeline |
| Air New Zealand |
| Pro Medicus |
Air New and Pro Medicus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Pro Medicus
The main advantage of trading using opposite Air New and Pro Medicus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Pro Medicus 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 Pro Medicus will offset losses from the drop in Pro Medicus' long position.| Air New vs. Jupiter Energy | Air New vs. WA1 Resources | Air New vs. Predictive Discovery | Air New vs. Cooper Metals |
| Pro Medicus vs. Pinnacle Investment Management | Pro Medicus vs. EP Financial Group | Pro Medicus vs. Magellan Financial Group | Pro Medicus vs. Hotel Property Investments |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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