Correlation Between Aegean Airlines and Companhia Paranaense

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

Diversification Opportunities for Aegean Airlines and Companhia Paranaense

0.77

Correlation Coefficient

Aegean Airlines  Companhia Paranaense

Poor diversification

The 3 months correlation between Aegean and Companhia is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense 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 Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Companhia Paranaense go up and down completely randomly.

Pair Corralation between Aegean Airlines and Companhia Paranaense

Assuming the 90 days horizon Aegean Airlines SA is expected to generate 0.54 times more return on investment than Companhia Paranaense. However, Aegean Airlines SA is 1.87 times less risky than Companhia Paranaense. It trades about -0.13 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.1 per unit of risk. If you would invest  1,213  in Aegean Airlines SA on September 14, 2024 and sell it today you would lose (128.00) from holding Aegean Airlines SA or give up 10.55% of portfolio value over 90 days.

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

Aegean Airlines SA  vs.  Companhia Paranaense de

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. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Companhia Paranaense

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Paranaense de 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aegean Airlines and Companhia Paranaense

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

The idea behind Aegean Airlines SA and Companhia Paranaense de 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.