Correlation Between Air France and Bilendi

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

By analyzing existing cross correlation between Air France KLM SA and Bilendi, you can compare the effects of market volatilities on Air France and Bilendi 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 Air France with a short position of Bilendi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air France and Bilendi.

Diversification Opportunities for Air France and Bilendi

0.14

Correlation Coefficient

Air France  Bilendi

Average diversification

The 3 months correlation between Air and Bilendi is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM SA and Bilendi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilendi and Air France 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 Air France KLM SA are associated (or correlated) with Bilendi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilendi has no effect on the direction of Air France i.e., Air France and Bilendi go up and down completely randomly.

Pair Corralation between Air France and Bilendi

Assuming the 90 days horizon Air France KLM SA is expected to under-perform the Bilendi. But the stock apears to be less risky and, when comparing its historical volatility, Air France KLM SA is 1.11 times less risky than Bilendi. The stock trades about -0.12 of its potential returns per unit of risk. The Bilendi is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,690  in Bilendi on October 23, 2024 and sell it today you would earn a total of  175.00  from holding Bilendi or generate 10.36% return on investment over 90 days.

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

Air France KLM SA  vs.  Bilendi

Air France KLM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air France KLM SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bilendi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bilendi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bilendi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air France and Bilendi

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

The idea behind Air France KLM SA and Bilendi 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.