Correlation Between Azul SA and Nok Airlines

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

By analyzing existing cross correlation between Azul SA and Nok Airlines Public, you can compare the effects of market volatilities on Azul SA and Nok 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 Azul SA with a short position of Nok Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azul SA and Nok Airlines.

Diversification Opportunities for Azul SA and Nok Airlines

0.0

Correlation Coefficient

Azul SA  Nok Airlines

Pay attention - limited upside

The 3 months correlation between Azul and Nok is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and Nok Airlines Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nok Airlines Public and Azul SA 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 Azul SA are associated (or correlated) with Nok Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nok Airlines Public has no effect on the direction of Azul SA i.e., Azul SA and Nok Airlines go up and down completely randomly.

Pair Corralation between Azul SA and Nok Airlines

If you would invest  169.00  in Azul SA on December 18, 2024 and sell it today you would earn a total of  13.00  from holding Azul SA or generate 7.69% return on investment over 90 days.

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

Azul SA  vs.  Nok Airlines Public

Azul SA

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Azul SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Azul SA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nok Airlines Public

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Azul SA and Nok Airlines

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

The idea behind Azul SA and Nok Airlines Public 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.