Correlation Between AEGEAN AIRLINES and INDOFOOD AGRI

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

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

Diversification Opportunities for AEGEAN AIRLINES and INDOFOOD AGRI

-0.63

Correlation Coefficient

AEGEAN AIRLINES  INDOFOOD AGRI

Excellent diversification

The 3 months correlation between AEGEAN and INDOFOOD is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and INDOFOOD AGRI go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and INDOFOOD AGRI

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.72 times more return on investment than INDOFOOD AGRI. However, AEGEAN AIRLINES is 1.4 times less risky than INDOFOOD AGRI. It trades about 0.11 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about -0.02 per unit of risk. If you would invest  968.00  in AEGEAN AIRLINES on December 4, 2024 and sell it today you would earn a total of  97.00  from holding AEGEAN AIRLINES or generate 10.02% return on investment over 90 days.

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

AEGEAN AIRLINES  vs.  INDOFOOD AGRI RES

AEGEAN AIRLINES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEGEAN AIRLINES are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, AEGEAN AIRLINES may actually be approaching a critical reversion point that can send shares even higher in April 2025.

INDOFOOD AGRI RES

Risk-Adjusted Performance

Very Weak

Over the last 90 days INDOFOOD AGRI RES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, INDOFOOD AGRI is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AEGEAN AIRLINES and INDOFOOD AGRI

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

The idea behind AEGEAN AIRLINES and INDOFOOD AGRI RES 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.