Correlation Between Lupatech and American Airlines
Can any of the company-specific risk be diversified away by investing in both Lupatech and American Airlines 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 Lupatech and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and American Airlines Group, you can compare the effects of market volatilities on Lupatech and American Airlines 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 Lupatech with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and American Airlines.
Diversification Opportunities for Lupatech and American Airlines
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lupatech and American is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Lupatech 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 Lupatech SA are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Lupatech i.e., Lupatech and American Airlines go up and down completely randomly.
Pair Corralation between Lupatech and American Airlines
Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the American Airlines. In addition to that, Lupatech is 1.59 times more volatile than American Airlines Group. It trades about -0.03 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.17 per unit of volatility. If you would invest 10,460 in American Airlines Group on October 13, 2024 and sell it today you would earn a total of 705.00 from holding American Airlines Group or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lupatech SA vs. American Airlines Group
Performance |
| Timeline |
| Lupatech SA |
| American Airlines |
Lupatech and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and American Airlines
The main advantage of trading using opposite Lupatech and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Eternit SA |
| American Airlines vs. Eastman Chemical | American Airlines vs. Cognizant Technology Solutions | American Airlines vs. Check Point Software | American Airlines vs. G2D Investments |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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