Correlation Between Air Transport and CeoTronics

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

Diversification Opportunities for Air Transport and CeoTronics

0.45

Correlation Coefficient

Air Transport  CeoTronics

Very weak diversification

The 3 months correlation between Air and CeoTronics is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG 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 CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Air Transport i.e., Air Transport and CeoTronics go up and down completely randomly.

Pair Corralation between Air Transport and CeoTronics

Assuming the 90 days horizon Air Transport Services is expected to generate 0.3 times more return on investment than CeoTronics. However, Air Transport Services is 3.31 times less risky than CeoTronics. It trades about 0.0 of its potential returns per unit of risk. CeoTronics AG is currently generating about -0.3 per unit of risk. If you would invest  2,100  in Air Transport Services on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Air Transport Services or generate 0.0% return on investment over 90 days.

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

Air Transport Services  vs.  CeoTronics AG

Air Transport Services

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

CeoTronics AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Transport and CeoTronics

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

The idea behind Air Transport Services and CeoTronics AG 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.