Correlation Between Auckland International and Aeroports

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

Diversification Opportunities for Auckland International and Aeroports

-0.5

Correlation Coefficient

Auckland International  Aeroports

Very good diversification

The 3 months correlation between Auckland and Aeroports is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Auckland International Airport and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris 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 Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of Auckland International i.e., Auckland International and Aeroports go up and down completely randomly.

Pair Corralation between Auckland International and Aeroports

Assuming the 90 days horizon Auckland International Airport is expected to under-perform the Aeroports. In addition to that, Auckland International is 1.82 times more volatile than Aeroports de Paris. It trades about -0.02 of its total potential returns per unit of risk. Aeroports de Paris is currently generating about 0.05 per unit of volatility. If you would invest  1,156  in Aeroports de Paris on December 31, 2024 and sell it today you would earn a total of  74.00  from holding Aeroports de Paris or generate 6.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Auckland International Airport  vs.  Aeroports de Paris

Auckland International

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aeroports de Paris

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aeroports de Paris are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aeroports may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Auckland International and Aeroports

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

The idea behind Auckland International Airport and Aeroports de Paris 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.