Correlation Between Air Transport and Mink Therapeutics

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

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

Diversification Opportunities for Air Transport and Mink Therapeutics

-0.3

Correlation Coefficient

Air Transport  Mink Therapeutics

Very good diversification

The 3 months correlation between Air and Mink is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Mink Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mink Therapeutics and Air Transport 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 Air Transport Services are associated (or correlated) with Mink Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mink Therapeutics has no effect on the direction of Air Transport i.e., Air Transport and Mink Therapeutics go up and down completely randomly.

Pair Corralation between Air Transport and Mink Therapeutics

Given the investment horizon of 90 days Air Transport Services is expected to generate 0.1 times more return on investment than Mink Therapeutics. However, Air Transport Services is 10.49 times less risky than Mink Therapeutics. It trades about -0.01 of its potential returns per unit of risk. Mink Therapeutics is currently generating about -0.26 per unit of risk. If you would invest  2,197  in Air Transport Services on September 27, 2024 and sell it today you would lose (2.00) from holding Air Transport Services or give up 0.09% of portfolio value over 90 days.

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

Air Transport Services  vs.  Mink Therapeutics

Air Transport Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Mink Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mink Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Air Transport and Mink Therapeutics

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

The idea behind Air Transport Services and Mink Therapeutics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.