Correlation Between Aeroports and Airports
Can any of the company-specific risk be diversified away by investing in both Aeroports and Airports 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 Aeroports and Airports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeroports de Paris and Airports of Thailand, you can compare the effects of market volatilities on Aeroports and Airports 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 Aeroports with a short position of Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeroports and Airports.
Diversification Opportunities for Aeroports and Airports
Average diversification
The 3 months correlation between Aeroports and Airports is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aeroports de Paris and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and Aeroports 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 Aeroports de Paris are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of Aeroports i.e., Aeroports and Airports go up and down completely randomly.
Pair Corralation between Aeroports and Airports
Assuming the 90 days horizon Aeroports is expected to generate 45.86 times less return on investment than Airports. But when comparing it to its historical volatility, Aeroports de Paris is 3.09 times less risky than Airports. It trades about 0.0 of its potential returns per unit of risk. Airports of Thailand is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 79.00 in Airports of Thailand on September 12, 2024 and sell it today you would earn a total of 87.00 from holding Airports of Thailand or generate 110.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeroports de Paris vs. Airports of Thailand
Performance |
| Timeline |
| Aeroports de Paris |
| Airports of Thailand |
Aeroports and Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeroports and Airports
The main advantage of trading using opposite Aeroports and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeroports position performs unexpectedly, Airports 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 Airports will offset losses from the drop in Airports' long position.| Aeroports vs. Aena SME SA | Aeroports vs. Superior Plus Corp | Aeroports vs. SIVERS SEMICONDUCTORS AB | Aeroports vs. Norsk Hydro ASA |
| Airports vs. Fast Retailing Co | Airports vs. COSTCO WHOLESALE CDR | Airports vs. ALTAIR RES INC | Airports vs. Norwegian Air Shuttle |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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