Correlation Between Aegean Airlines and Terna Energy

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

Diversification Opportunities for Aegean Airlines and Terna Energy

0.47

Correlation Coefficient

Aegean Airlines  Terna Energy

Very weak diversification

The 3 months correlation between Aegean and Terna is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Terna Energy Societe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terna Energy Societe 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 Terna Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terna Energy Societe has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Terna Energy go up and down completely randomly.

Pair Corralation between Aegean Airlines and Terna Energy

Assuming the 90 days trading horizon Aegean Airlines SA is expected to generate 2.95 times more return on investment than Terna Energy. However, Aegean Airlines is 2.95 times more volatile than Terna Energy Societe. It trades about 0.21 of its potential returns per unit of risk. Terna Energy Societe is currently generating about 0.01 per unit of risk. If you would invest  1,001  in Aegean Airlines SA on December 30, 2024 and sell it today you would earn a total of  227.00  from holding Aegean Airlines SA or generate 22.68% return on investment over 90 days.

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

Aegean Airlines SA  vs.  Terna Energy Societe

Aegean Airlines SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Aegean Airlines unveiled solid returns over the last few months and may actually be approaching a breakup point.

Terna Energy Societe

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Terna Energy Societe are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Terna Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aegean Airlines and Terna Energy

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

The idea behind Aegean Airlines SA and Terna Energy Societe 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.