Correlation Between Air New and TTM Technologies
Can any of the company-specific risk be diversified away by investing in both Air New and TTM Technologies 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 TTM Technologies 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 TTM Technologies, you can compare the effects of market volatilities on Air New and TTM Technologies 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 TTM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and TTM Technologies.
Diversification Opportunities for Air New and TTM Technologies
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and TTM is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies 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 TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of Air New i.e., Air New and TTM Technologies go up and down completely randomly.
Pair Corralation between Air New and TTM Technologies
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.57 times more return on investment than TTM Technologies. However, Air New Zealand is 1.74 times less risky than TTM Technologies. It trades about 0.12 of its potential returns per unit of risk. TTM Technologies is currently generating about -0.1 per unit of risk. If you would invest 29.00 in Air New Zealand on December 18, 2024 and sell it today you would earn a total of 4.00 from holding Air New Zealand or generate 13.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Air New Zealand vs. TTM Technologies
Performance |
Timeline |
Air New Zealand |
TTM Technologies |
Air New and TTM Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air New and TTM Technologies
The main advantage of trading using opposite Air New and TTM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, TTM Technologies 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 TTM Technologies will offset losses from the drop in TTM Technologies' long position.Air New vs. SERI INDUSTRIAL EO | Air New vs. Automatic Data Processing | Air New vs. GALENA MINING LTD | Air New vs. Cass Information Systems |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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