Correlation Between Aegean Airlines and OPERA SOFTWARE

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

Diversification Opportunities for Aegean Airlines and OPERA SOFTWARE

-0.04

Correlation Coefficient

Aegean Airlines  OPERA SOFTWARE

Good diversification

The 3 months correlation between Aegean and OPERA is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and OPERA SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPERA SOFTWARE 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 OPERA SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPERA SOFTWARE has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and OPERA SOFTWARE go up and down completely randomly.

Pair Corralation between Aegean Airlines and OPERA SOFTWARE

Assuming the 90 days horizon Aegean Airlines SA is expected to generate 1.01 times more return on investment than OPERA SOFTWARE. However, Aegean Airlines is 1.01 times more volatile than OPERA SOFTWARE. It trades about 0.01 of its potential returns per unit of risk. OPERA SOFTWARE is currently generating about 0.01 per unit of risk. If you would invest  1,019  in Aegean Airlines SA on October 10, 2024 and sell it today you would earn a total of  3.00  from holding Aegean Airlines SA or generate 0.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Aegean Airlines SA  vs.  OPERA SOFTWARE

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.

OPERA SOFTWARE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aegean Airlines and OPERA SOFTWARE

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

The idea behind Aegean Airlines SA and OPERA SOFTWARE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.