Correlation Between Grupo Aeroportuario and Airports

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

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

Diversification Opportunities for Grupo Aeroportuario and Airports

0.45

Correlation Coefficient

Grupo Aeroportuario  Airports

Very weak diversification

The 3 months correlation between Grupo and Airports is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del 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 Grupo Aeroportuario 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 Grupo Aeroportuario del 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 Grupo Aeroportuario i.e., Grupo Aeroportuario and Airports go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and Airports

Considering the 90-day investment horizon Grupo Aeroportuario del is expected to under-perform the Airports. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Aeroportuario del is 6.04 times less risky than Airports. The stock trades about 0.0 of its potential returns per unit of risk. The Airports of Thailand is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  131.00  in Airports of Thailand on August 31, 2024 and sell it today you would lose (6.00) from holding Airports of Thailand or give up 4.58% of portfolio value over 90 days.

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

Grupo Aeroportuario del  vs.  Airports of Thailand

Grupo Aeroportuario del

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Aeroportuario del has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Airports of Thailand

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Airports of Thailand are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Airports reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Aeroportuario and Airports

The main advantage of trading using opposite Grupo Aeroportuario and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aeroportuario 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 Grupo Aeroportuario del 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..