Correlation Between AEGEAN AIRLINES and Tokyo Electron

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

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

Diversification Opportunities for AEGEAN AIRLINES and Tokyo Electron

-0.56

Correlation Coefficient

AEGEAN AIRLINES  Tokyo Electron

Excellent diversification

The 3 months correlation between AEGEAN and Tokyo is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Tokyo Electron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron 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 Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Tokyo Electron go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and Tokyo Electron

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.6 times more return on investment than Tokyo Electron. However, AEGEAN AIRLINES is 1.66 times less risky than Tokyo Electron. It trades about 0.21 of its potential returns per unit of risk. Tokyo Electron Limited is currently generating about -0.01 per unit of risk. If you would invest  993.00  in AEGEAN AIRLINES on December 28, 2024 and sell it today you would earn a total of  232.00  from holding AEGEAN AIRLINES or generate 23.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

AEGEAN AIRLINES  vs.  Tokyo Electron Limited

AEGEAN AIRLINES

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AEGEAN AIRLINES are ranked lower than 16 (%) 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.

Tokyo Electron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tokyo Electron Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tokyo Electron 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 Tokyo Electron

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

The idea behind AEGEAN AIRLINES and Tokyo Electron Limited 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.