Correlation Between Air Transport and African Agriculture
Can any of the company-specific risk be diversified away by investing in both Air Transport and African Agriculture 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 Transport and African Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and African Agriculture Holdings, you can compare the effects of market volatilities on Air Transport and African Agriculture 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 Transport with a short position of African Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and African Agriculture.
Diversification Opportunities for Air Transport and African Agriculture
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and African is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and African Agriculture Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Agriculture and Air Transport 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 Transport Services are associated (or correlated) with African Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Agriculture has no effect on the direction of Air Transport i.e., Air Transport and African Agriculture go up and down completely randomly.
Pair Corralation between Air Transport and African Agriculture
If you would invest 0.37 in African Agriculture Holdings on September 13, 2024 and sell it today you would earn a total of 0.00 from holding African Agriculture Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Air Transport Services vs. African Agriculture Holdings
Performance |
| Timeline |
| Air Transport Services |
| African Agriculture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Air Transport and African Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and African Agriculture
The main advantage of trading using opposite Air Transport and African Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, African Agriculture 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 African Agriculture will offset losses from the drop in African Agriculture's long position.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| African Agriculture vs. Capital Clean Energy | African Agriculture vs. PennantPark Investment | African Agriculture vs. US Global Investors | African Agriculture vs. Royalty Management Holding |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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