Correlation Between Aozora Bank and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both Aozora Bank and Aegean Airlines 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 Aozora Bank and Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aozora Bank and Aegean Airlines SA, you can compare the effects of market volatilities on Aozora Bank and Aegean Airlines 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 Aozora Bank with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aozora Bank and Aegean Airlines.
Diversification Opportunities for Aozora Bank and Aegean Airlines
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aozora and Aegean is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aozora Bank and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and Aozora Bank 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 Aozora Bank are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Aozora Bank i.e., Aozora Bank and Aegean Airlines go up and down completely randomly.
Pair Corralation between Aozora Bank and Aegean Airlines
Assuming the 90 days horizon Aozora Bank is expected to under-perform the Aegean Airlines. In addition to that, Aozora Bank is 1.49 times more volatile than Aegean Airlines SA. It trades about -0.02 of its total potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.02 per unit of volatility. If you would invest 1,081 in Aegean Airlines SA on September 4, 2024 and sell it today you would lose (131.00) from holding Aegean Airlines SA or give up 12.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aozora Bank vs. Aegean Airlines SA
Performance |
| Timeline |
| Aozora Bank |
| Aegean Airlines SA |
Aozora Bank and Aegean Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aozora Bank and Aegean Airlines
The main advantage of trading using opposite Aozora Bank and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aozora Bank position performs unexpectedly, Aegean Airlines 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 Aegean Airlines will offset losses from the drop in Aegean Airlines' long position.The idea behind Aozora Bank and Aegean Airlines SA 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.| Aegean Airlines vs. Delta Air Lines | Aegean Airlines vs. AIR CHINA LTD | Aegean Airlines vs. RYANAIR HLDGS ADR | Aegean Airlines vs. Southwest Airlines Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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