Correlation Between Auckland International and Aena SME

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

By analyzing existing cross correlation between Auckland International Airport and Aena SME SA, you can compare the effects of market volatilities on Auckland International and Aena SME 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 Auckland International with a short position of Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auckland International and Aena SME.

Diversification Opportunities for Auckland International and Aena SME

0.46

Correlation Coefficient

Auckland International  Aena SME

Very weak diversification

The 3 months correlation between Auckland and Aena is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Auckland International Airport and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME SA and Auckland International 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 Auckland International Airport are associated (or correlated) with Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Auckland International i.e., Auckland International and Aena SME go up and down completely randomly.

Pair Corralation between Auckland International and Aena SME

Assuming the 90 days horizon Auckland International Airport is expected to under-perform the Aena SME. In addition to that, Auckland International is 3.7 times more volatile than Aena SME SA. It trades about -0.01 of its total potential returns per unit of risk. Aena SME SA is currently generating about 0.11 per unit of volatility. If you would invest  20,082  in Aena SME SA on September 2, 2024 and sell it today you would earn a total of  1,338  from holding Aena SME SA or generate 6.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Auckland International Airport  vs.  Aena SME SA

Auckland International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auckland International Airport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Auckland International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Aena SME SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aena SME may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Auckland International and Aena SME

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

The idea behind Auckland International Airport and Aena SME 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.