Correlation Between AEGEAN AIRLINES and HORNBACH Baumarkt

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

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

Diversification Opportunities for AEGEAN AIRLINES and HORNBACH Baumarkt

0.37

Correlation Coefficient

AEGEAN AIRLINES  HORNBACH Baumarkt

Weak diversification

The 3 months correlation between AEGEAN and HORNBACH is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and HORNBACH Baumarkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HORNBACH Baumarkt 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 HORNBACH Baumarkt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HORNBACH Baumarkt has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and HORNBACH Baumarkt go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and HORNBACH Baumarkt

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 1.18 times more return on investment than HORNBACH Baumarkt. However, AEGEAN AIRLINES is 1.18 times more volatile than HORNBACH Baumarkt AG. It trades about 0.15 of its potential returns per unit of risk. HORNBACH Baumarkt AG is currently generating about 0.12 per unit of risk. If you would invest  1,002  in AEGEAN AIRLINES on December 22, 2024 and sell it today you would earn a total of  163.00  from holding AEGEAN AIRLINES or generate 16.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

AEGEAN AIRLINES  vs.  HORNBACH Baumarkt AG

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.

HORNBACH Baumarkt

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HORNBACH Baumarkt AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, HORNBACH Baumarkt may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AEGEAN AIRLINES and HORNBACH Baumarkt

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

The idea behind AEGEAN AIRLINES and HORNBACH Baumarkt AG 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.