Correlation Between Chorus Aviation and Acciona SA

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Can any of the company-specific risk be diversified away by investing in both Chorus Aviation and Acciona SA 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 Chorus Aviation and Acciona SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chorus Aviation and Acciona SA, you can compare the effects of market volatilities on Chorus Aviation and Acciona SA 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 Chorus Aviation with a short position of Acciona SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chorus Aviation and Acciona SA.

Diversification Opportunities for Chorus Aviation and Acciona SA

-0.91
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Chorus and Acciona is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Chorus Aviation and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA and Chorus Aviation 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 Chorus Aviation are associated (or correlated) with Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of Chorus Aviation i.e., Chorus Aviation and Acciona SA go up and down completely randomly.

Pair Corralation between Chorus Aviation and Acciona SA

Assuming the 90 days horizon Chorus Aviation is expected to generate 0.53 times more return on investment than Acciona SA. However, Chorus Aviation is 1.9 times less risky than Acciona SA. It trades about 0.26 of its potential returns per unit of risk. Acciona SA is currently generating about -0.07 per unit of risk. If you would invest  216.00  in Chorus Aviation on August 29, 2024 and sell it today you would earn a total of  21.00  from holding Chorus Aviation or generate 9.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

Chorus Aviation  vs.  Acciona SA

 Performance 
       Timeline  
Chorus Aviation 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Chorus Aviation are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Chorus Aviation reported solid returns over the last few months and may actually be approaching a breakup point.
Acciona SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Acciona SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Chorus Aviation and Acciona SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chorus Aviation and Acciona SA

The main advantage of trading using opposite Chorus Aviation and Acciona SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chorus Aviation position performs unexpectedly, Acciona SA 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 Acciona SA will offset losses from the drop in Acciona SA's long position.
The idea behind Chorus Aviation and Acciona SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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