Correlation Between Air New and AS Tallink
Can any of the company-specific risk be diversified away by investing in both Air New and AS Tallink 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 New and AS Tallink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and AS Tallink Grupp, you can compare the effects of market volatilities on Air New and AS Tallink 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 New with a short position of AS Tallink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and AS Tallink.
Diversification Opportunities for Air New and AS Tallink
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and T5N is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and AS Tallink Grupp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AS Tallink Grupp and Air New 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 New Zealand are associated (or correlated) with AS Tallink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AS Tallink Grupp has no effect on the direction of Air New i.e., Air New and AS Tallink go up and down completely randomly.
Pair Corralation between Air New and AS Tallink
Assuming the 90 days trading horizon Air New Zealand is expected to generate 1.3 times more return on investment than AS Tallink. However, Air New is 1.3 times more volatile than AS Tallink Grupp. It trades about 0.18 of its potential returns per unit of risk. AS Tallink Grupp is currently generating about -0.05 per unit of risk. If you would invest 29.00 in Air New Zealand on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Air New Zealand or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. AS Tallink Grupp
Performance |
| Timeline |
| Air New Zealand |
| AS Tallink Grupp |
Air New and AS Tallink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and AS Tallink
The main advantage of trading using opposite Air New and AS Tallink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, AS Tallink 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 AS Tallink will offset losses from the drop in AS Tallink's long position.| Air New vs. SIVERS SEMICONDUCTORS AB | Air New vs. Darden Restaurants | Air New vs. Reliance Steel Aluminum | Air New vs. Q2M Managementberatung AG |
| AS Tallink vs. HF SINCLAIR P | AS Tallink vs. Evolution Mining Limited | AS Tallink vs. Air New Zealand | AS Tallink vs. Perseus Mining Limited |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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