Correlation Between Aegean Airlines and ALVGR

Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and ALVGR 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 ALVGR 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 ALVGR 35, you can compare the effects of market volatilities on Aegean Airlines and ALVGR 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 ALVGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and ALVGR.

Diversification Opportunities for Aegean Airlines and ALVGR

0.04

Correlation Coefficient

Aegean Airlines  ALVGR

Significant diversification

The 3 months correlation between Aegean and ALVGR is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and ALVGR 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALVGR 35 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 ALVGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALVGR 35 has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and ALVGR go up and down completely randomly.

Pair Corralation between Aegean Airlines and ALVGR

Assuming the 90 days horizon Aegean Airlines SA is expected to generate 0.74 times more return on investment than ALVGR. However, Aegean Airlines SA is 1.35 times less risky than ALVGR. It trades about 0.12 of its potential returns per unit of risk. ALVGR 35 is currently generating about -0.18 per unit of risk. If you would invest  1,025  in Aegean Airlines SA on December 29, 2024 and sell it today you would earn a total of  170.00  from holding Aegean Airlines SA or generate 16.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	40.63%
Values	Daily Returns

Aegean Airlines SA  vs.  ALVGR 35

Aegean Airlines SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aegean Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

ALVGR 35

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALVGR 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for ALVGR 35 investors.

Pair Trading with Aegean Airlines and ALVGR

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

The idea behind Aegean Airlines SA and ALVGR 35 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.