Correlation Between Air New and SARTORIUS

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

Diversification Opportunities for Air New and SARTORIUS

0.67

Correlation Coefficient

Air New  SARTORIUS

Poor diversification

The 3 months correlation between Air and SARTORIUS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and SARTORIUS AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SARTORIUS AG UNSPADR 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 SARTORIUS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SARTORIUS AG UNSPADR has no effect on the direction of Air New i.e., Air New and SARTORIUS go up and down completely randomly.

Pair Corralation between Air New and SARTORIUS

Assuming the 90 days trading horizon Air New is expected to generate 2.08 times less return on investment than SARTORIUS. But when comparing it to its historical volatility, Air New Zealand is 1.77 times less risky than SARTORIUS. It trades about 0.07 of its potential returns per unit of risk. SARTORIUS AG UNSPADR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,400  in SARTORIUS AG UNSPADR on December 21, 2024 and sell it today you would earn a total of  440.00  from holding SARTORIUS AG UNSPADR or generate 12.94% return on investment over 90 days.

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

Air New Zealand  vs.  SARTORIUS AG UNSPADR

Air New Zealand

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air New Zealand are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Air New may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SARTORIUS AG UNSPADR

Risk-Adjusted Performance

Modest

Over the last 90 days SARTORIUS AG UNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, SARTORIUS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air New and SARTORIUS

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

The idea behind Air New Zealand and SARTORIUS AG UNSPADR 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.