Correlation Between Air New and Technology One
Can any of the company-specific risk be diversified away by investing in both Air New and Technology One 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 Technology One 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 Technology One, you can compare the effects of market volatilities on Air New and Technology One 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 Technology One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Technology One.
Diversification Opportunities for Air New and Technology One
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Technology is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Technology One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One 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 Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of Air New i.e., Air New and Technology One go up and down completely randomly.
Pair Corralation between Air New and Technology One
Assuming the 90 days trading horizon Air New Zealand is expected to generate 1.17 times more return on investment than Technology One. However, Air New is 1.17 times more volatile than Technology One. It trades about 0.12 of its potential returns per unit of risk. Technology One is currently generating about -0.14 per unit of risk. If you would invest 54.00 in Air New Zealand on October 29, 2024 and sell it today you would earn a total of 2.00 from holding Air New Zealand or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Technology One
Performance |
| Timeline |
| Air New Zealand |
| Technology One |
Air New and Technology One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Technology One
The main advantage of trading using opposite Air New and Technology One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Technology One 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 Technology One will offset losses from the drop in Technology One's long position.| Air New vs. Energy Technologies Limited | Air New vs. Ambertech | Air New vs. Clime Investment Management | Air New vs. Australian Strategic Materials |
| Technology One vs. Charter Hall Retail | Technology One vs. Auctus Alternative Investments | Technology One vs. Autosports Group | Technology One vs. Arc Funds |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |