Correlation Between EVN AG and Air Transport

Can any of the company-specific risk be diversified away by investing in both EVN AG and Air Transport 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 EVN AG and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EVN AG and Air Transport Services, you can compare the effects of market volatilities on EVN AG and Air Transport 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 EVN AG with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVN AG and Air Transport.

Diversification Opportunities for EVN AG and Air Transport

-0.83

Correlation Coefficient

EVN AG  Air Transport

Pay attention - limited upside

The 3 months correlation between EVN and Air is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding EVN AG and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and EVN AG 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 EVN AG are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of EVN AG i.e., EVN AG and Air Transport go up and down completely randomly.

Pair Corralation between EVN AG and Air Transport

Assuming the 90 days horizon EVN AG is expected to under-perform the Air Transport. In addition to that, EVN AG is 2.27 times more volatile than Air Transport Services. It trades about -0.11 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.17 per unit of volatility. If you would invest  2,000  in Air Transport Services on October 6, 2024 and sell it today you would earn a total of  120.00  from holding Air Transport Services or generate 6.0% return on investment over 90 days.

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

EVN AG  vs.  Air Transport Services

EVN AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVN AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Air Transport Services

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EVN AG and Air Transport

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

The idea behind EVN AG and Air Transport Services 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.