Correlation Between Air France and Socit Htelire

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

Diversification Opportunities for Air France and Socit Htelire

0.65

Correlation Coefficient

Air France  Socit Htelire

Poor diversification

The 3 months correlation between Air and Socit is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM SA and Socit Htelire et in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit Htelire et 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 Socit Htelire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit Htelire et has no effect on the direction of Air France i.e., Air France and Socit Htelire go up and down completely randomly.

Pair Corralation between Air France and Socit Htelire

Assuming the 90 days horizon Air France KLM SA is expected to under-perform the Socit Htelire. But the stock apears to be less risky and, when comparing its historical volatility, Air France KLM SA is 1.1 times less risky than Socit Htelire. The stock trades about -0.03 of its potential returns per unit of risk. The Socit Htelire et is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  23,800  in Socit Htelire et on October 9, 2024 and sell it today you would lose (2,200) from holding Socit Htelire et or give up 9.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.41%
Values	Daily Returns

Air France KLM SA  vs.  Socit Htelire et

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Socit Htelire et

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Socit Htelire et has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Socit Htelire is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Air France and Socit Htelire

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

The idea behind Air France KLM SA and Socit Htelire et 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.