Correlation Between Air Transport and Corporate Travel
Can any of the company-specific risk be diversified away by investing in both Air Transport and Corporate Travel 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 Corporate Travel 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 Corporate Travel Management, you can compare the effects of market volatilities on Air Transport and Corporate Travel 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 Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Corporate Travel.
Diversification Opportunities for Air Transport and Corporate Travel
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Corporate is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man 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 Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of Air Transport i.e., Air Transport and Corporate Travel go up and down completely randomly.
Pair Corralation between Air Transport and Corporate Travel
Assuming the 90 days horizon Air Transport Services is expected to generate 1.15 times more return on investment than Corporate Travel. However, Air Transport is 1.15 times more volatile than Corporate Travel Management. It trades about 0.13 of its potential returns per unit of risk. Corporate Travel Management is currently generating about 0.04 per unit of risk. If you would invest 1,240 in Air Transport Services on September 1, 2024 and sell it today you would earn a total of 840.00 from holding Air Transport Services or generate 67.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Corporate Travel Management
Performance |
| Timeline |
| Air Transport Services |
| Corporate Travel Man |
Air Transport and Corporate Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Corporate Travel
The main advantage of trading using opposite Air Transport and Corporate Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Corporate Travel 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 Corporate Travel will offset losses from the drop in Corporate Travel's long position.| Air Transport vs. Digilife Technologies Limited | Air Transport vs. COMBA TELECOM SYST | Air Transport vs. Singapore Telecommunications Limited | Air Transport vs. Chunghwa Telecom Co |
| Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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