Correlation Between Air Transport and Aegean Airlines

Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and Aegean Airlines 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 Aegean Airlines SA, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Aegean Airlines.

Diversification Opportunities for Air Transport and Aegean Airlines

-0.75

Correlation Coefficient

Air Transport  Aegean Airlines

Pay attention - limited upside

The 3 months correlation between Air and Aegean is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA 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 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 SA has no effect on the direction of Air Transport i.e., Air Transport and Aegean Airlines go up and down completely randomly.

Pair Corralation between Air Transport and Aegean Airlines

Assuming the 90 days horizon Air Transport is expected to generate 15.33 times less return on investment than Aegean Airlines. In addition to that, Air Transport is 1.28 times more volatile than Aegean Airlines SA. It trades about 0.0 of its total potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.06 per unit of volatility. If you would invest  529.00  in Aegean Airlines SA on October 4, 2024 and sell it today you would earn a total of  462.00  from holding Aegean Airlines SA or generate 87.33% return on investment over 90 days.

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

Air Transport Services  vs.  Aegean Airlines SA

Air Transport Services

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Aegean Airlines SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegean Airlines SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aegean Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Air Transport and Aegean Airlines

The main advantage of trading using opposite Air Transport and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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' long position.

The idea behind Air Transport Services and Aegean Airlines SA 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.