Correlation Between Airports and Aeroports
Can any of the company-specific risk be diversified away by investing in both Airports and Aeroports 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 Aeroports 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 Aeroports de Paris, you can compare the effects of market volatilities on Airports and Aeroports 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 Aeroports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Aeroports.
Diversification Opportunities for Airports and Aeroports
Average diversification
The 3 months correlation between Airports and Aeroports is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris 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 Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of Airports i.e., Airports and Aeroports go up and down completely randomly.
Pair Corralation between Airports and Aeroports
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 3.16 times more return on investment than Aeroports. However, Airports is 3.16 times more volatile than Aeroports de Paris. It trades about 0.05 of its potential returns per unit of risk. Aeroports de Paris is currently generating about 0.0 per unit of risk. If you would invest 77.00 in Airports of Thailand on September 12, 2024 and sell it today you would earn a total of 89.00 from holding Airports of Thailand or generate 115.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Aeroports de Paris
Performance |
| Timeline |
| Airports of Thailand |
| Aeroports de Paris |
Airports and Aeroports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Aeroports
The main advantage of trading using opposite Airports and Aeroports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Aeroports 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 Aeroports will offset losses from the drop in Aeroports' long position.| Airports vs. Airports of Thailand | Airports vs. Auckland International Airport | Airports vs. Aena SME SA | Airports vs. Ryanair Holdings plc |
| Aeroports vs. Aena SME SA | Aeroports vs. Superior Plus Corp | Aeroports vs. SIVERS SEMICONDUCTORS AB | Aeroports vs. Norsk Hydro ASA |
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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