Correlation Between JD SPORTS and Aegean Airlines

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

By analyzing existing cross correlation between JD SPORTS FASH and Aegean Airlines SA, you can compare the effects of market volatilities on JD SPORTS and Aegean Airlines 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 JD SPORTS with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Aegean Airlines.

Diversification Opportunities for JD SPORTS and Aegean Airlines

0.67

Correlation Coefficient

JD SPORTS  Aegean Airlines

Poor diversification

The 3 months correlation between 9JD and Aegean is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and JD SPORTS 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 JD SPORTS FASH are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of JD SPORTS i.e., JD SPORTS and Aegean Airlines go up and down completely randomly.

Pair Corralation between JD SPORTS and Aegean Airlines

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Aegean Airlines. In addition to that, JD SPORTS is 1.29 times more volatile than Aegean Airlines SA. It trades about -0.02 of its total potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.04 per unit of volatility. If you would invest  689.00  in Aegean Airlines SA on October 5, 2024 and sell it today you would earn a total of  302.00  from holding Aegean Airlines SA or generate 43.83% return on investment over 90 days.

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

JD SPORTS FASH  vs.  Aegean Airlines SA

JD SPORTS FASH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD SPORTS FASH 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with JD SPORTS and Aegean Airlines

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

The idea behind JD SPORTS FASH and Aegean Airlines SA 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.