Correlation Between Aegean Airlines and HDFC Bank

Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and HDFC Bank 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 HDFC Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aegean Airlines SA and HDFC Bank, you can compare the effects of market volatilities on Aegean Airlines and HDFC Bank 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 HDFC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and HDFC Bank.

Diversification Opportunities for Aegean Airlines and HDFC Bank

-0.34

Correlation Coefficient

Aegean Airlines  HDFC Bank

Very good diversification

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

Pair Corralation between Aegean Airlines and HDFC Bank

Assuming the 90 days horizon Aegean Airlines SA is expected to generate 1.5 times more return on investment than HDFC Bank. However, Aegean Airlines is 1.5 times more volatile than HDFC Bank. It trades about 0.06 of its potential returns per unit of risk. HDFC Bank is currently generating about 0.0 per unit of risk. If you would invest  591.00  in Aegean Airlines SA on October 23, 2024 and sell it today you would earn a total of  406.00  from holding Aegean Airlines SA or generate 68.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Aegean Airlines SA  vs.  HDFC Bank

Aegean Airlines SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegean Airlines SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aegean Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HDFC Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HDFC Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HDFC Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aegean Airlines and HDFC Bank

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

The idea behind Aegean Airlines SA and HDFC Bank 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.