Correlation Between Air New and Sandon Capital
Can any of the company-specific risk be diversified away by investing in both Air New and Sandon Capital 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 Sandon Capital 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 Sandon Capital Investments, you can compare the effects of market volatilities on Air New and Sandon Capital 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 Sandon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Sandon Capital.
Diversification Opportunities for Air New and Sandon Capital
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Sandon is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Sandon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandon Capital Inves 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 Sandon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandon Capital Inves has no effect on the direction of Air New i.e., Air New and Sandon Capital go up and down completely randomly.
Pair Corralation between Air New and Sandon Capital
Assuming the 90 days trading horizon Air New is expected to generate 1.62 times less return on investment than Sandon Capital. But when comparing it to its historical volatility, Air New Zealand is 1.01 times less risky than Sandon Capital. It trades about 0.05 of its potential returns per unit of risk. Sandon Capital Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Sandon Capital Investments on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Sandon Capital Investments or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Air New Zealand vs. Sandon Capital Investments
Performance |
| Timeline |
| Air New Zealand |
| Sandon Capital Inves |
Air New and Sandon Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Sandon Capital
The main advantage of trading using opposite Air New and Sandon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Sandon Capital 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 Sandon Capital will offset losses from the drop in Sandon Capital's long position.| Air New vs. Carlton Investments | Air New vs. Auctus Alternative Investments | Air New vs. Diversified United Investment | Air New vs. REGAL ASIAN INVESTMENTS |
| Sandon Capital vs. Alto Metals | Sandon Capital vs. Leeuwin Metals | Sandon Capital vs. Qbe Insurance Group | Sandon Capital vs. Computershare |
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 Stocks Directory module to find actively traded stocks across global markets.
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