Correlation Between Concurrent Technologies and Southwest Airlines

Can any of the company-specific risk be diversified away by investing in both Concurrent Technologies and Southwest Airlines 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 Concurrent Technologies and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Concurrent Technologies Plc and Southwest Airlines Co, you can compare the effects of market volatilities on Concurrent Technologies and Southwest Airlines 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 Concurrent Technologies with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concurrent Technologies and Southwest Airlines.

Diversification Opportunities for Concurrent Technologies and Southwest Airlines

-0.72

Correlation Coefficient

Concurrent Technologies  Southwest Airlines

Pay attention - limited upside

The 3 months correlation between Concurrent and Southwest is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Concurrent Technologies Plc and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Concurrent Technologies 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 Concurrent Technologies Plc are associated (or correlated) with Southwest Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Airlines has no effect on the direction of Concurrent Technologies i.e., Concurrent Technologies and Southwest Airlines go up and down completely randomly.

Pair Corralation between Concurrent Technologies and Southwest Airlines

Assuming the 90 days trading horizon Concurrent Technologies Plc is expected to generate 1.24 times more return on investment than Southwest Airlines. However, Concurrent Technologies is 1.24 times more volatile than Southwest Airlines Co. It trades about 0.14 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.03 per unit of risk. If you would invest  13,225  in Concurrent Technologies Plc on December 26, 2024 and sell it today you would earn a total of  3,275  from holding Concurrent Technologies Plc or generate 24.76% return on investment over 90 days.

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

Concurrent Technologies Plc  vs.  Southwest Airlines Co

Concurrent Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Concurrent Technologies Plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Concurrent Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Southwest Airlines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Southwest Airlines Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Southwest Airlines is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Concurrent Technologies and Southwest Airlines

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

The idea behind Concurrent Technologies Plc and Southwest Airlines Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.