Correlation Between Aegean Airlines and GBS Software

Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and GBS Software 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 GBS Software 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 GBS Software AG, you can compare the effects of market volatilities on Aegean Airlines and GBS Software 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 GBS Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and GBS Software.

Diversification Opportunities for Aegean Airlines and GBS Software

-0.02

Correlation Coefficient

Aegean Airlines  GBS Software

Good diversification

The 3 months correlation between Aegean and GBS is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and GBS Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBS Software AG 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 GBS Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBS Software AG has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and GBS Software go up and down completely randomly.

Pair Corralation between Aegean Airlines and GBS Software

Assuming the 90 days horizon Aegean Airlines SA is expected to generate 1.04 times more return on investment than GBS Software. However, Aegean Airlines is 1.04 times more volatile than GBS Software AG. It trades about 0.07 of its potential returns per unit of risk. GBS Software AG is currently generating about 0.04 per unit of risk. If you would invest  537.00  in Aegean Airlines SA on October 10, 2024 and sell it today you would earn a total of  485.00  from holding Aegean Airlines SA or generate 90.32% return on investment over 90 days.

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

Aegean Airlines SA  vs.  GBS Software AG

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

GBS Software AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GBS Software AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GBS Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aegean Airlines and GBS Software

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

The idea behind Aegean Airlines SA and GBS Software 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.