Correlation Between Aegean Airlines and Plexus Corp

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

Diversification Opportunities for Aegean Airlines and Plexus Corp

-0.9

Correlation Coefficient

Aegean Airlines  Plexus Corp

Pay attention - limited upside

The 3 months correlation between Aegean and Plexus is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Plexus Corp go up and down completely randomly.

Pair Corralation between Aegean Airlines and Plexus Corp

Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Plexus Corp. But the stock apears to be less risky and, when comparing its historical volatility, Aegean Airlines SA is 1.64 times less risky than Plexus Corp. The stock trades about -0.16 of its potential returns per unit of risk. The Plexus Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  11,500  in Plexus Corp on August 31, 2024 and sell it today you would earn a total of  3,800  from holding Plexus Corp or generate 33.04% return on investment over 90 days.

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

Aegean Airlines SA  vs.  Plexus Corp

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Plexus Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plexus Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Plexus Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aegean Airlines and Plexus Corp

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

The idea behind Aegean Airlines SA and Plexus Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.