Correlation Between AEGEAN AIRLINES and United Breweries

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

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

Diversification Opportunities for AEGEAN AIRLINES and United Breweries

0.75

Correlation Coefficient

AEGEAN AIRLINES  United Breweries

Poor diversification

The 3 months correlation between AEGEAN and United is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries 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 United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and United Breweries go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and United Breweries

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 1.54 times less return on investment than United Breweries. In addition to that, AEGEAN AIRLINES is 1.02 times more volatile than United Breweries Co. It trades about 0.16 of its total potential returns per unit of risk. United Breweries Co is currently generating about 0.24 per unit of volatility. If you would invest  1,090  in United Breweries Co on December 22, 2024 and sell it today you would earn a total of  290.00  from holding United Breweries Co or generate 26.61% return on investment over 90 days.

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

AEGEAN AIRLINES  vs.  United Breweries Co

AEGEAN AIRLINES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AEGEAN AIRLINES are ranked lower than 12 (%) 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.

United Breweries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Breweries Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, United Breweries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEGEAN AIRLINES and United Breweries

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

The idea behind AEGEAN AIRLINES and United Breweries Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.