Correlation Between AEGEAN AIRLINES and Far East

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

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

Diversification Opportunities for AEGEAN AIRLINES and Far East

0.34

Correlation Coefficient

AEGEAN AIRLINES  Far East

Weak diversification

The 3 months correlation between AEGEAN and Far is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Far East Horizon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far East Horizon 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 Far East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far East Horizon has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Far East go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and Far East

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 1.14 times less return on investment than Far East. But when comparing it to its historical volatility, AEGEAN AIRLINES is 1.81 times less risky than Far East. It trades about 0.16 of its potential returns per unit of risk. Far East Horizon is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  62.00  in Far East Horizon on December 20, 2024 and sell it today you would earn a total of  11.00  from holding Far East Horizon or generate 17.74% 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.  Far East Horizon

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.

Far East Horizon

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Far East Horizon are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Far East reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEGEAN AIRLINES and Far East

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

The idea behind AEGEAN AIRLINES and Far East Horizon 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.