Correlation Between Aegean Airlines and LVMH Moët

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

Diversification Opportunities for Aegean Airlines and LVMH Moët

-0.28

Correlation Coefficient

Aegean Airlines  LVMH Moët

Very good diversification

The 3 months correlation between Aegean and LVMH is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy 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 LVMH Moët. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and LVMH Moët go up and down completely randomly.

Pair Corralation between Aegean Airlines and LVMH Moët

Assuming the 90 days horizon Aegean Airlines SA is expected to generate 1.01 times more return on investment than LVMH Moët. However, Aegean Airlines is 1.01 times more volatile than LVMH Mot Hennessy. It trades about 0.13 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about -0.03 per unit of risk. If you would invest  1,002  in Aegean Airlines SA on December 22, 2024 and sell it today you would earn a total of  157.00  from holding Aegean Airlines SA or generate 15.67% 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.  LVMH Mot Hennessy

Aegean Airlines SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aegean Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

LVMH Mot Hennessy

Risk-Adjusted Performance

Very Weak

Over the last 90 days LVMH Mot Hennessy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, LVMH Moët 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 LVMH Moët

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

The idea behind Aegean Airlines SA and LVMH Mot Hennessy 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.