Correlation Between Aegean Airlines and Almacenes Xito

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

Diversification Opportunities for Aegean Airlines and Almacenes Xito

0.76

Correlation Coefficient

Aegean Airlines  Almacenes Xito

Poor diversification

The 3 months correlation between Aegean and Almacenes is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Almacenes xito SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almacenes xito SA 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 Almacenes Xito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almacenes xito SA has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Almacenes Xito go up and down completely randomly.

Pair Corralation between Aegean Airlines and Almacenes Xito

Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Almacenes Xito. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aegean Airlines SA is 1.54 times less risky than Almacenes Xito. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Almacenes xito SA is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  381.00  in Almacenes xito SA on September 27, 2024 and sell it today you would lose (12.00) from holding Almacenes xito SA or give up 3.15% of portfolio value over 90 days.

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

Aegean Airlines SA  vs.  Almacenes xito SA

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 unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Almacenes xito SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almacenes xito SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Aegean Airlines and Almacenes Xito

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

The idea behind Aegean Airlines SA and Almacenes xito SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.