Correlation Between Airbus Group and Deezer SA

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

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

Diversification Opportunities for Airbus Group and Deezer SA

-0.7

Correlation Coefficient

Airbus Group  Deezer SA

Excellent diversification

The 3 months correlation between Airbus and Deezer is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group SE and Deezer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deezer SA and Airbus Group 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 Airbus Group SE are associated (or correlated) with Deezer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deezer SA has no effect on the direction of Airbus Group i.e., Airbus Group and Deezer SA go up and down completely randomly.

Pair Corralation between Airbus Group and Deezer SA

Assuming the 90 days trading horizon Airbus Group SE is expected to generate 0.41 times more return on investment than Deezer SA. However, Airbus Group SE is 2.44 times less risky than Deezer SA. It trades about 0.05 of its potential returns per unit of risk. Deezer SA is currently generating about -0.03 per unit of risk. If you would invest  11,385  in Airbus Group SE on September 28, 2024 and sell it today you would earn a total of  3,985  from holding Airbus Group SE or generate 35.0% return on investment over 90 days.

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

Airbus Group SE  vs.  Deezer SA

Airbus Group SE

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Airbus Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Deezer SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deezer SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Airbus Group and Deezer SA

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

The idea behind Airbus Group SE and Deezer 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.