Correlation Between Alaska Air and KYUSHU EL
Can any of the company-specific risk be diversified away by investing in both Alaska Air and KYUSHU EL 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 Alaska Air and KYUSHU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Air Group and KYUSHU EL PWR, you can compare the effects of market volatilities on Alaska Air and KYUSHU EL 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 Alaska Air with a short position of KYUSHU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and KYUSHU EL.
Diversification Opportunities for Alaska Air and KYUSHU EL
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alaska and KYUSHU is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and KYUSHU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYUSHU EL PWR and Alaska Air 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 Alaska Air Group are associated (or correlated) with KYUSHU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYUSHU EL PWR has no effect on the direction of Alaska Air i.e., Alaska Air and KYUSHU EL go up and down completely randomly.
Pair Corralation between Alaska Air and KYUSHU EL
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 1.25 times more return on investment than KYUSHU EL. However, Alaska Air is 1.25 times more volatile than KYUSHU EL PWR. It trades about 0.23 of its potential returns per unit of risk. KYUSHU EL PWR is currently generating about -0.07 per unit of risk. If you would invest 5,108 in Alaska Air Group on September 16, 2024 and sell it today you would earn a total of 866.00 from holding Alaska Air Group or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. KYUSHU EL PWR
Performance |
| Timeline |
| Alaska Air Group |
| KYUSHU EL PWR |
Alaska Air and KYUSHU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and KYUSHU EL
The main advantage of trading using opposite Alaska Air and KYUSHU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, KYUSHU EL 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 KYUSHU EL will offset losses from the drop in KYUSHU EL's long position.The idea behind Alaska Air Group and KYUSHU EL PWR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KYUSHU EL vs. Alaska Air Group | KYUSHU EL vs. Verizon Communications | KYUSHU EL vs. Charter Communications | KYUSHU EL vs. Singapore Telecommunications Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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