Correlation Between AEGEAN AIRLINES and Zhongsheng Group

Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and Zhongsheng Group 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 AEGEAN AIRLINES and Zhongsheng Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEGEAN AIRLINES and Zhongsheng Group Holdings, you can compare the effects of market volatilities on AEGEAN AIRLINES and Zhongsheng Group 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 AEGEAN AIRLINES with a short position of Zhongsheng Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Zhongsheng Group.

Diversification Opportunities for AEGEAN AIRLINES and Zhongsheng Group

-0.61

Correlation Coefficient

AEGEAN AIRLINES  Zhongsheng Group

Excellent diversification

The 3 months correlation between AEGEAN and Zhongsheng is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Zhongsheng Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongsheng Group Holdings and AEGEAN AIRLINES 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 AEGEAN AIRLINES are associated (or correlated) with Zhongsheng Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongsheng Group Holdings has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Zhongsheng Group go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and Zhongsheng Group

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.51 times more return on investment than Zhongsheng Group. However, AEGEAN AIRLINES is 1.96 times less risky than Zhongsheng Group. It trades about 0.21 of its potential returns per unit of risk. Zhongsheng Group Holdings is currently generating about -0.34 per unit of risk. If you would invest  951.00  in AEGEAN AIRLINES on October 4, 2024 and sell it today you would earn a total of  42.00  from holding AEGEAN AIRLINES or generate 4.42% return on investment over 90 days.

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

AEGEAN AIRLINES  vs.  Zhongsheng Group Holdings

AEGEAN AIRLINES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEGEAN AIRLINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AEGEAN AIRLINES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Zhongsheng Group Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongsheng Group Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Zhongsheng Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AEGEAN AIRLINES and Zhongsheng Group

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

The idea behind AEGEAN AIRLINES and Zhongsheng Group Holdings 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.

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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.