Correlation Between Alaska Air and GECCH

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

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

Diversification Opportunities for Alaska Air and GECCH

-0.47

Correlation Coefficient

Alaska Air  GECCH

Very good diversification

The 3 months correlation between Alaska and GECCH is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and GECCH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GECCH and Alaska Air 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 Alaska Air Group are associated (or correlated) with GECCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GECCH has no effect on the direction of Alaska Air i.e., Alaska Air and GECCH go up and down completely randomly.

Pair Corralation between Alaska Air and GECCH

Considering the 90-day investment horizon Alaska Air Group is expected to under-perform the GECCH. In addition to that, Alaska Air is 4.29 times more volatile than GECCH. It trades about -0.11 of its total potential returns per unit of risk. GECCH is currently generating about 0.08 per unit of volatility. If you would invest  2,425  in GECCH on December 27, 2024 and sell it today you would earn a total of  72.00  from holding GECCH or generate 2.97% return on investment over 90 days.

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

Alaska Air Group  vs.  GECCH

Alaska Air Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alaska Air Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

GECCH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GECCH are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, GECCH is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alaska Air and GECCH

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

The idea behind Alaska Air Group and GECCH 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.