LATAM Airlines (Chile) Volatility
| LTM Stock | CLP 13.15 0.11 0.84% |
As of now, LATAM Stock is not too volatile. LATAM Airlines Group has Sharpe Ratio of 0.13, which conveys that the company had a 0.13% return per unit of standard deviation over the last 3 months. We have found twenty-eight technical indicators for LATAM Airlines, which you can use to evaluate the volatility of the entity. Please verify LATAM Airlines' downside deviation of 1.53, and Mean Deviation of 1.05 to check out if the risk estimate we provide is consistent with the expected return of 0.19%. Key indicators related to LATAM Airlines' volatility include:
90 Days Market Risk | Chance Of Distress | 90 Days Economic Sensitivity |
LATAM Airlines Stock volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of LATAM daily returns, and it is calculated using variance and standard deviation. We also use LATAM's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of LATAM Airlines volatility.
LATAM |
Since volatility provides investors with entry points to take advantage of stock prices, companies, such as LATAM Airlines can benefit from it. Downward market volatility can be a perfect environment for investors who play the long game. Here, they may decide to buy additional stocks of LATAM Airlines at lower prices. For example, an investor can purchase LATAM stock that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of LATAM Airlines' stock rises, investors can sell out and invest the proceeds in other equities with better opportunities. Investing when markets are volatile with better valuations will accord both investors and companies the opportunity to generate better long-term returns.
Moving together with LATAM Stock
| 0.87 | AFPCAPITAL | AFP Capital SA | PairCorr |
Moving against LATAM Stock
LATAM Airlines Market Sensitivity And Downside Risk
LATAM Airlines' beta coefficient measures the volatility of LATAM stock compared to the systematic risk of the entire market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents LATAM stock's returns against your selected market. In other words, LATAM Airlines's beta of -0.0495 provides an investor with an approximation of how much risk LATAM Airlines stock can potentially add to one of your existing portfolios. LATAM Airlines Group has relatively low volatility with skewness of -0.07 and kurtosis of 0.83. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure LATAM Airlines' stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact LATAM Airlines' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different financial instruments as prices fall.
3 Months Beta |Analyze LATAM Airlines Group Demand TrendCheck current 90 days LATAM Airlines correlation with market (Dow Jones Industrial)LATAM Beta |
LATAM standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. A typical volatile entity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.
Standard Deviation | 1.47 |
It is essential to understand the difference between upside risk (as represented by LATAM Airlines's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of LATAM Airlines' daily returns or price. Since the actual investment returns on holding a position in latam stock tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in LATAM Airlines.
LATAM Airlines Group Stock Volatility Analysis
Volatility refers to the frequency at which LATAM Airlines stock price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with LATAM Airlines' price changes. Investors will then calculate the volatility of LATAM Airlines' stock to predict their future moves. A stock that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A stock with relatively stable price changes has low volatility. A highly volatile stock is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of LATAM Airlines' volatility:
Historical Volatility
This type of stock volatility measures LATAM Airlines' fluctuations based on previous trends. It's commonly used to predict LATAM Airlines' future behavior based on its past. However, it cannot conclusively determine the future direction of the stock.Implied Volatility
This type of volatility provides a positive outlook on future price fluctuations for LATAM Airlines' current market price. This means that the stock will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on LATAM Airlines' to be redeemed at a future date.Transformation |
The output start index for this execution was zero with a total number of output elements of sixty-one. LATAM Airlines Group Average Price is the average of the sum of open, high, low and close daily prices of a bar. It can be used to smooth an indicator that normally takes just the closing price as input.
LATAM Airlines Projected Return Density Against Market
Assuming the 90 days trading horizon LATAM Airlines Group has a beta of -0.0495 . This indicates as returns on the benchmark increase, returns on holding LATAM Airlines are expected to decrease at a much lower rate. During a bear market, however, LATAM Airlines Group is likely to outperform the market.Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to LATAM Airlines or Industrials sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that LATAM Airlines' price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a LATAM stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
LATAM Airlines Group has an alpha of 0.2273, implying that it can generate a 0.23 percent excess return over Dow Jones Industrial after adjusting for the inherited market risk (beta). Predicted Return Density |
| Returns |
What Drives a LATAM Airlines Price Volatility?
Several factors can influence a stock's market volatility:Industry
Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.Political and Economic environment
When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.The Company's Performance
Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.LATAM Airlines Stock Risk Measures
Assuming the 90 days trading horizon the coefficient of variation of LATAM Airlines is 786.79. The daily returns are distributed with a variance of 2.17 and standard deviation of 1.47. The mean deviation of LATAM Airlines Group is currently at 1.1. For similar time horizon, the selected benchmark (Dow Jones Industrial) has volatility of 0.77
α | Alpha over Dow Jones | 0.23 | |
β | Beta against Dow Jones | -0.05 | |
σ | Overall volatility | 1.47 | |
Ir | Information ratio | 0.07 |
LATAM Airlines Stock Return Volatility
LATAM Airlines historical daily return volatility represents how much of LATAM Airlines stock's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. The firm assumes 1.4732% volatility of returns over the 90 days investment horizon. By contrast, Dow Jones Industrial accepts 0.7796% volatility on return distribution over the 90 days horizon. Performance |
| Timeline |
About LATAM Airlines Volatility
Volatility is a rate at which the price of LATAM Airlines or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of LATAM Airlines may increase or decrease. In other words, similar to LATAM's beta indicator, it measures the risk of LATAM Airlines and helps estimate the fluctuations that may happen in a short period of time. So if prices of LATAM Airlines fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.LATAM Airlines Group S.A., together with its subsidiaries, provides passenger and cargo air transportation services in Peru, Argentina, the United States, Europe, Colombia, Brazil, Ecuador, Chile, the Asia Pacific, and rest of Latin America. On May 26, 2020, LATAM Airlines Group S.A., along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 in the U.S. LATAM AIRLINES is traded on Commodity Exchange in Exotistan.
LATAM Airlines' stock volatility refers to the amount of uncertainty or risk involved with the size of changes in its stock's price. It is a statistical measure of the dispersion of returns on LATAM Stock over a specified period of time, often expressed as the standard deviation of daily returns. In other words, it measures how much LATAM Airlines' price varies over time.
3 ways to utilize LATAM Airlines' volatility to invest better
Higher LATAM Airlines' stock volatility means that the price of its stock is changing rapidly and unpredictably, while lower stock volatility indicates that the price of LATAM Airlines Group stock is relatively stable. Investors and traders use stock volatility as an indicator of risk and potential reward, as stocks with higher volatility can offer the potential for more significant returns but also come with a greater risk of losses. LATAM Airlines Group stock volatility can provide helpful information for making investment decisions in the following ways:- Measuring Risk: Volatility can be used as a measure of risk, which can help you determine the potential fluctuations in the value of LATAM Airlines Group investment. A higher volatility means higher risk and potentially larger changes in value.
- Identifying Opportunities: High volatility in LATAM Airlines' stock can indicate that there is potential for significant price movements, either up or down, which could present investment opportunities.
- Diversification: Understanding how the volatility of LATAM Airlines' stock relates to your other investments can help you create a well-diversified portfolio of assets with varying levels of risk.
LATAM Airlines Investment Opportunity
LATAM Airlines Group has a volatility of 1.47 and is 1.88 times more volatile than Dow Jones Industrial. 13 percent of all equities and portfolios are less risky than LATAM Airlines. You can use LATAM Airlines Group to enhance the returns of your portfolios. The stock experiences a moderate upward volatility. Check odds of LATAM Airlines to be traded at 14.47 in 90 days.Good diversification
The correlation between LATAM Airlines Group and DJI is -0.03 (i.e., Good diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and DJI in the same portfolio, assuming nothing else is changed.
LATAM Airlines Additional Risk Indicators
The analysis of LATAM Airlines' secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in LATAM Airlines' investment and either accepting that risk or mitigating it. Along with some common measures of LATAM Airlines stock's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
| Risk Adjusted Performance | 0.1287 | |||
| Market Risk Adjusted Performance | (4.46) | |||
| Mean Deviation | 1.05 | |||
| Semi Deviation | 1.25 | |||
| Downside Deviation | 1.53 | |||
| Coefficient Of Variation | 618.37 | |||
| Standard Deviation | 1.43 |
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stocks, we recommend comparing similar stocks with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.
LATAM Airlines Suggested Diversification Pairs
Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against LATAM Airlines as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. LATAM Airlines' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, LATAM Airlines' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to LATAM Airlines Group.
Additional Information and Resources on Investing in LATAM Stock
When determining whether LATAM Airlines Group is a strong investment it is important to analyze LATAM Airlines' competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact LATAM Airlines' future performance. For an informed investment choice regarding LATAM Stock, refer to the following important reports:Check out Correlation Analysis to better understand how to build diversified portfolios, which includes a position in LATAM Airlines Group. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in board of governors. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.