Correlation Between AEGEAN AIRLINES and PT Gajah

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

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

Diversification Opportunities for AEGEAN AIRLINES and PT Gajah

0.11

Correlation Coefficient

AEGEAN AIRLINES  PT Gajah

Average diversification

The 3 months correlation between AEGEAN and GH8 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and PT Gajah Tunggal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Gajah Tunggal 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 PT Gajah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Gajah Tunggal has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and PT Gajah go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and PT Gajah

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 5.2 times less return on investment than PT Gajah. But when comparing it to its historical volatility, AEGEAN AIRLINES is 7.01 times less risky than PT Gajah. It trades about 0.17 of its potential returns per unit of risk. PT Gajah Tunggal is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5.20  in PT Gajah Tunggal on October 6, 2024 and sell it today you would earn a total of  0.70  from holding PT Gajah Tunggal or generate 13.46% return on investment over 90 days.

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

AEGEAN AIRLINES  vs.  PT Gajah Tunggal

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.

PT Gajah Tunggal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Gajah Tunggal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Gajah reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEGEAN AIRLINES and PT Gajah

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

The idea behind AEGEAN AIRLINES and PT Gajah Tunggal 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.