Correlation Between MACOM Technology and Aegean Airlines

Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Aegean 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 MACOM Technology and Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MACOM Technology Solutions and Aegean Airlines SA, you can compare the effects of market volatilities on MACOM Technology and Aegean 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 MACOM Technology with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Aegean Airlines.

Diversification Opportunities for MACOM Technology and Aegean Airlines

-0.62

Correlation Coefficient

MACOM Technology  Aegean Airlines

Excellent diversification

The 3 months correlation between MACOM and Aegean is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and MACOM Technology 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 MACOM Technology Solutions are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of MACOM Technology i.e., MACOM Technology and Aegean Airlines go up and down completely randomly.

Pair Corralation between MACOM Technology and Aegean Airlines

Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.29 times more return on investment than Aegean Airlines. However, MACOM Technology is 1.29 times more volatile than Aegean Airlines SA. It trades about 0.09 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.01 per unit of risk. If you would invest  7,800  in MACOM Technology Solutions on September 27, 2024 and sell it today you would earn a total of  5,100  from holding MACOM Technology Solutions or generate 65.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

MACOM Technology Solutions  vs.  Aegean Airlines SA

MACOM Technology Sol

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MACOM Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Aegean Airlines SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegean Airlines SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aegean Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MACOM Technology and Aegean Airlines

The main advantage of trading using opposite MACOM Technology and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Aegean 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 Aegean Airlines will offset losses from the drop in Aegean Airlines' long position.

The idea behind MACOM Technology Solutions and Aegean Airlines SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.