Correlation Between Aena SME and Airports

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

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

Diversification Opportunities for Aena SME and Airports

-0.86

Correlation Coefficient

Aena SME  Airports

Pay attention - limited upside

The 3 months correlation between Aena and Airports is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Aena SME SA and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and Aena SME 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 Aena SME SA are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of Aena SME i.e., Aena SME and Airports go up and down completely randomly.

Pair Corralation between Aena SME and Airports

Assuming the 90 days horizon Aena SME SA is expected to generate 0.22 times more return on investment than Airports. However, Aena SME SA is 4.56 times less risky than Airports. It trades about 0.18 of its potential returns per unit of risk. Airports of Thailand is currently generating about -0.08 per unit of risk. If you would invest  20,720  in Aena SME SA on December 29, 2024 and sell it today you would earn a total of  3,061  from holding Aena SME SA or generate 14.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Aena SME SA  vs.  Airports of Thailand

Aena SME SA

Risk-Adjusted Performance

Good

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

Airports of Thailand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Airports of Thailand 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 fairly 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 the company investors.

Pair Trading with Aena SME and Airports

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

The idea behind Aena SME SA and Airports of Thailand 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.