Correlation Between Airports and Aena SME
Can any of the company-specific risk be diversified away by investing in both Airports and Aena SME 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 Airports and Aena SME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airports of Thailand and Aena SME SA, you can compare the effects of market volatilities on Airports and Aena SME 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 Airports with a short position of Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Aena SME.
Diversification Opportunities for Airports and Aena SME
Poor diversification
The 3 months correlation between Airports and Aena is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME SA and Airports 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 Airports of Thailand are associated (or correlated) with Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Airports i.e., Airports and Aena SME go up and down completely randomly.
Pair Corralation between Airports and Aena SME
Assuming the 90 days horizon Airports of Thailand is expected to under-perform the Aena SME. In addition to that, Airports is 7.64 times more volatile than Aena SME SA. It trades about -0.21 of its total potential returns per unit of risk. Aena SME SA is currently generating about -0.26 per unit of volatility. If you would invest 22,321 in Aena SME SA on August 29, 2024 and sell it today you would lose (1,110) from holding Aena SME SA or give up 4.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Aena SME SA
Performance |
| Timeline |
| Airports of Thailand |
| Aena SME SA |
Airports and Aena SME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Aena SME
The main advantage of trading using opposite Airports and Aena SME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Aena SME 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 Aena SME will offset losses from the drop in Aena SME's long position.| Airports vs. Aeroports de Paris | Airports vs. Corporacion America Airports | Airports vs. Grupo Aeroportuario del | Airports vs. Grupo Aeroportuario del |
| Aena SME vs. Aeroports de Paris | Aena SME vs. Corporacion America Airports | Aena SME vs. Grupo Aeroportuario del | Aena SME vs. Grupo Aeroportuario del |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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