Correlation Between AEGEAN AIRLINES and CITIC Telecom

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

By analyzing existing cross correlation between AEGEAN AIRLINES and CITIC Telecom International, you can compare the effects of market volatilities on AEGEAN AIRLINES and CITIC Telecom 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 CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and CITIC Telecom.

Diversification Opportunities for AEGEAN AIRLINES and CITIC Telecom

0.22

Correlation Coefficient

AEGEAN AIRLINES  CITIC Telecom

Modest diversification

The 3 months correlation between AEGEAN and CITIC is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern 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 CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and CITIC Telecom go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and CITIC Telecom

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.39 times more return on investment than CITIC Telecom. However, AEGEAN AIRLINES is 2.58 times less risky than CITIC Telecom. It trades about 0.17 of its potential returns per unit of risk. CITIC Telecom International is currently generating about 0.01 per unit of risk. If you would invest  1,002  in AEGEAN AIRLINES on December 21, 2024 and sell it today you would earn a total of  177.00  from holding AEGEAN AIRLINES or generate 17.66% return on investment over 90 days.

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

AEGEAN AIRLINES  vs.  CITIC Telecom International

AEGEAN AIRLINES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AEGEAN AIRLINES are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AEGEAN AIRLINES exhibited solid returns over the last few months and may actually be approaching a breakup point.

CITIC Telecom Intern

Risk-Adjusted Performance

Very Weak

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

Pair Trading with AEGEAN AIRLINES and CITIC Telecom

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

The idea behind AEGEAN AIRLINES and CITIC Telecom International 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.