Correlation Between ENTREPARTICULIERS and Air New

Can any of the company-specific risk be diversified away by investing in both ENTREPARTICULIERS and Air New 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 ENTREPARTICULIERS and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ENTREPARTICULIERS EO 10 and Air New Zealand, you can compare the effects of market volatilities on ENTREPARTICULIERS and Air New 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 ENTREPARTICULIERS with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENTREPARTICULIERS and Air New.

Diversification Opportunities for ENTREPARTICULIERS and Air New

0.66

Correlation Coefficient

ENTREPARTICULIERS  Air New

Poor diversification

The 3 months correlation between ENTREPARTICULIERS and Air is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ENTREPARTICULIERS EO 10 and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and ENTREPARTICULIERS 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 ENTREPARTICULIERS EO 10 are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of ENTREPARTICULIERS i.e., ENTREPARTICULIERS and Air New go up and down completely randomly.

Pair Corralation between ENTREPARTICULIERS and Air New

Assuming the 90 days horizon ENTREPARTICULIERS EO 10 is expected to generate 4.4 times more return on investment than Air New. However, ENTREPARTICULIERS is 4.4 times more volatile than Air New Zealand. It trades about 0.1 of its potential returns per unit of risk. Air New Zealand is currently generating about 0.07 per unit of risk. If you would invest  36.00  in ENTREPARTICULIERS EO 10 on December 2, 2024 and sell it today you would earn a total of  15.00  from holding ENTREPARTICULIERS EO 10 or generate 41.67% return on investment over 90 days.

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

ENTREPARTICULIERS EO 10  vs.  Air New Zealand

ENTREPARTICULIERS EO

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENTREPARTICULIERS EO 10 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ENTREPARTICULIERS reported solid returns over the last few months and may actually be approaching a breakup point.

Air New Zealand

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air New Zealand are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Air New may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ENTREPARTICULIERS and Air New

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

The idea behind ENTREPARTICULIERS EO 10 and Air New Zealand 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.