Correlation Between Onxeo SA and Auckland International

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

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

Diversification Opportunities for Onxeo SA and Auckland International

0.21

Correlation Coefficient

Onxeo SA  Auckland International

Modest diversification

The 3 months correlation between Onxeo and Auckland is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Onxeo SA and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International and Onxeo 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 Onxeo SA are associated (or correlated) with Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Onxeo SA i.e., Onxeo SA and Auckland International go up and down completely randomly.

Pair Corralation between Onxeo SA and Auckland International

Assuming the 90 days horizon Onxeo SA is expected to generate 12.67 times more return on investment than Auckland International. However, Onxeo SA is 12.67 times more volatile than Auckland International Airport. It trades about 0.04 of its potential returns per unit of risk. Auckland International Airport is currently generating about 0.01 per unit of risk. If you would invest  8.29  in Onxeo SA on December 29, 2024 and sell it today you would lose (1.81) from holding Onxeo SA or give up 21.83% of portfolio value over 90 days.

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

Onxeo SA  vs.  Auckland International Airport

Onxeo SA

Risk-Adjusted Performance

Insignificant

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

Auckland International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auckland International Airport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Auckland International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Onxeo SA and Auckland International

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

The idea behind Onxeo SA and Auckland International Airport 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.