Correlation Between Aegean Airlines and Constellation Software

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

Diversification Opportunities for Aegean Airlines and Constellation Software

-0.52

Correlation Coefficient

Aegean Airlines  Constellation Software

Excellent diversification

The 3 months correlation between Aegean and Constellation is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation 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 Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Constellation Software go up and down completely randomly.

Pair Corralation between Aegean Airlines and Constellation Software

Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Constellation Software. In addition to that, Aegean Airlines is 1.2 times more volatile than Constellation Software. It trades about -0.05 of its total potential returns per unit of risk. Constellation Software is currently generating about 0.06 per unit of volatility. If you would invest  290,403  in Constellation Software on October 5, 2024 and sell it today you would earn a total of  12,597  from holding Constellation Software or generate 4.34% return on investment over 90 days.

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

Aegean Airlines SA  vs.  Constellation 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.

Constellation Software

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Constellation Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Constellation 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 Constellation Software

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

The idea behind Aegean Airlines SA and Constellation 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.