Correlation Between Airports and Air Transport
Can any of the company-specific risk be diversified away by investing in both Airports and Air Transport 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 Airports and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airports of Thailand and Air Transport Services, you can compare the effects of market volatilities on Airports and Air Transport 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 Airports with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Air Transport.
Diversification Opportunities for Airports and Air Transport
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Airports and Air is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and Airports 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 Airports of Thailand are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Airports i.e., Airports and Air Transport go up and down completely randomly.
Pair Corralation between Airports and Air Transport
Assuming the 90 days trading horizon Airports is expected to generate 6.51 times less return on investment than Air Transport. In addition to that, Airports is 1.38 times more volatile than Air Transport Services. It trades about 0.03 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.23 per unit of volatility. If you would invest 1,970 in Air Transport Services on September 5, 2024 and sell it today you would earn a total of 110.00 from holding Air Transport Services or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Air Transport Services
Performance |
| Timeline |
| Airports of Thailand |
| Air Transport Services |
Airports and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Air Transport
The main advantage of trading using opposite Airports and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Airports vs. JAPAN AIRLINES | Airports vs. Playa Hotels Resorts | Airports vs. Ming Le Sports | Airports vs. PLAY2CHILL SA ZY |
| Air Transport vs. Airports of Thailand | Air Transport vs. Airports of Thailand | Air Transport vs. Aena SME SA | Air Transport vs. AENA SME UNSPADR110 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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