Correlation Between Aegean Airlines and Karelia Tobacco

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

Diversification Opportunities for Aegean Airlines and Karelia Tobacco

-0.36

Correlation Coefficient

Aegean Airlines  Karelia Tobacco

Very good diversification

The 3 months correlation between Aegean and Karelia is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Karelia Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karelia Tobacco 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 Karelia Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karelia Tobacco has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Karelia Tobacco go up and down completely randomly.

Pair Corralation between Aegean Airlines and Karelia Tobacco

Assuming the 90 days trading horizon Aegean Airlines SA is expected to under-perform the Karelia Tobacco. In addition to that, Aegean Airlines is 1.25 times more volatile than Karelia Tobacco. It trades about -0.16 of its total potential returns per unit of risk. Karelia Tobacco is currently generating about -0.01 per unit of volatility. If you would invest  34,000  in Karelia Tobacco on September 5, 2024 and sell it today you would lose (400.00) from holding Karelia Tobacco or give up 1.18% of portfolio value over 90 days.

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

Aegean Airlines SA  vs.  Karelia Tobacco

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. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Karelia Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Karelia Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Karelia Tobacco is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aegean Airlines and Karelia Tobacco

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

The idea behind Aegean Airlines SA and Karelia Tobacco 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.