Correlation Between Chorus Aviation and Hermes International

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

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

Diversification Opportunities for Chorus Aviation and Hermes International

0.01

Correlation Coefficient

Chorus Aviation  Hermes International

Significant diversification

The 3 months correlation between Chorus and Hermes is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chorus Aviation and Hermes International SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermes International SCA and Chorus Aviation 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 Chorus Aviation are associated (or correlated) with Hermes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermes International SCA has no effect on the direction of Chorus Aviation i.e., Chorus Aviation and Hermes International go up and down completely randomly.

Pair Corralation between Chorus Aviation and Hermes International

Assuming the 90 days horizon Chorus Aviation is expected to generate 50.94 times more return on investment than Hermes International. However, Chorus Aviation is 50.94 times more volatile than Hermes International SCA. It trades about 0.15 of its potential returns per unit of risk. Hermes International SCA is currently generating about 0.1 per unit of risk. If you would invest  1,462  in Chorus Aviation on December 29, 2024 and sell it today you would lose (5.00) from holding Chorus Aviation or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Chorus Aviation  vs.  Hermes International SCA

Chorus Aviation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chorus Aviation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Chorus Aviation reported solid returns over the last few months and may actually be approaching a breakup point.

Hermes International SCA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hermes International SCA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hermes International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chorus Aviation and Hermes International

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

The idea behind Chorus Aviation and Hermes International SCA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.