Correlation Between Apple and AEGEAN AIRLINES

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

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

Diversification Opportunities for Apple and AEGEAN AIRLINES

-0.62

Correlation Coefficient

Apple  AEGEAN AIRLINES

Excellent diversification

The 3 months correlation between Apple and AEGEAN is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and AEGEAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEGEAN AIRLINES and Apple 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 Apple Inc are associated (or correlated) with AEGEAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEGEAN AIRLINES has no effect on the direction of Apple i.e., Apple and AEGEAN AIRLINES go up and down completely randomly.

Pair Corralation between Apple and AEGEAN AIRLINES

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.74 times more return on investment than AEGEAN AIRLINES. However, Apple Inc is 1.35 times less risky than AEGEAN AIRLINES. It trades about 0.07 of its potential returns per unit of risk. AEGEAN AIRLINES is currently generating about -0.01 per unit of risk. If you would invest  17,186  in Apple Inc on September 12, 2024 and sell it today you would earn a total of  6,254  from holding Apple Inc or generate 36.39% return on investment over 90 days.

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

Apple Inc  vs.  AEGEAN AIRLINES

Apple Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

AEGEAN AIRLINES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEGEAN AIRLINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Apple and AEGEAN AIRLINES

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

The idea behind Apple Inc and AEGEAN AIRLINES 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.