Correlation Between Aegean Airlines and ITALIAN WINE

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

Diversification Opportunities for Aegean Airlines and ITALIAN WINE

-0.28

Correlation Coefficient

Aegean Airlines  ITALIAN WINE

Very good diversification

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

Pair Corralation between Aegean Airlines and ITALIAN WINE

Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the ITALIAN WINE. But the stock apears to be less risky and, when comparing its historical volatility, Aegean Airlines SA is 1.05 times less risky than ITALIAN WINE. The stock trades about -0.02 of its potential returns per unit of risk. The ITALIAN WINE BRANDS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,778  in ITALIAN WINE BRANDS on October 6, 2024 and sell it today you would earn a total of  462.00  from holding ITALIAN WINE BRANDS or generate 25.98% 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.  ITALIAN WINE BRANDS

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.

ITALIAN WINE BRANDS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aegean Airlines and ITALIAN WINE

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

The idea behind Aegean Airlines SA and ITALIAN WINE BRANDS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.