Correlation Between Air New and AFFLUENT MEDICAL

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

By analyzing existing cross correlation between Air New Zealand and AFFLUENT MEDICAL SAS, you can compare the effects of market volatilities on Air New and AFFLUENT MEDICAL 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 New with a short position of AFFLUENT MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and AFFLUENT MEDICAL.

Diversification Opportunities for Air New and AFFLUENT MEDICAL

-0.78

Correlation Coefficient

Air New  AFFLUENT MEDICAL

Pay attention - limited upside

The 3 months correlation between Air and AFFLUENT is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and AFFLUENT MEDICAL SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFFLUENT MEDICAL SAS and Air New 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 New Zealand are associated (or correlated) with AFFLUENT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFFLUENT MEDICAL SAS has no effect on the direction of Air New i.e., Air New and AFFLUENT MEDICAL go up and down completely randomly.

Pair Corralation between Air New and AFFLUENT MEDICAL

Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.65 times more return on investment than AFFLUENT MEDICAL. However, Air New Zealand is 1.53 times less risky than AFFLUENT MEDICAL. It trades about 0.08 of its potential returns per unit of risk. AFFLUENT MEDICAL SAS is currently generating about 0.02 per unit of risk. If you would invest  32.00  in Air New Zealand on October 25, 2024 and sell it today you would earn a total of  1.00  from holding Air New Zealand or generate 3.13% return on investment over 90 days.

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

Air New Zealand  vs.  AFFLUENT MEDICAL SAS

Air New Zealand

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air New Zealand are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Air New exhibited solid returns over the last few months and may actually be approaching a breakup point.

AFFLUENT MEDICAL SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFFLUENT MEDICAL SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Air New and AFFLUENT MEDICAL

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

The idea behind Air New Zealand and AFFLUENT MEDICAL SAS 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.