Correlation Between Air Transport and MTRLimited
Can any of the company-specific risk be diversified away by investing in both Air Transport and MTRLimited 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 MTRLimited 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 MTR Limited, you can compare the effects of market volatilities on Air Transport and MTRLimited 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 MTRLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and MTRLimited.
Diversification Opportunities for Air Transport and MTRLimited
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and MTRLimited is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and MTR Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTR Limited 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 MTRLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTR Limited has no effect on the direction of Air Transport i.e., Air Transport and MTRLimited go up and down completely randomly.
Pair Corralation between Air Transport and MTRLimited
Assuming the 90 days horizon Air Transport Services is expected to generate 1.08 times more return on investment than MTRLimited. However, Air Transport is 1.08 times more volatile than MTR Limited. It trades about 0.06 of its potential returns per unit of risk. MTR Limited is currently generating about 0.06 per unit of risk. If you would invest 1,520 in Air Transport Services on October 16, 2024 and sell it today you would earn a total of 620.00 from holding Air Transport Services or generate 40.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. MTR Limited
Performance |
| Timeline |
| Air Transport Services |
| MTR Limited |
Air Transport and MTRLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and MTRLimited
The main advantage of trading using opposite Air Transport and MTRLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, MTRLimited 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 MTRLimited will offset losses from the drop in MTRLimited's long position.| Air Transport vs. Iridium Communications | Air Transport vs. MAG SILVER | Air Transport vs. De Grey Mining | Air Transport vs. T Mobile |
| MTRLimited vs. Air Transport Services | MTRLimited vs. BROADPEAK SA EO | MTRLimited vs. Pebblebrook Hotel Trust | MTRLimited vs. Broadridge Financial Solutions |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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