Correlation Between Flughafen Zürich and Aena SME

Can any of the company-specific risk be diversified away by investing in both Flughafen Zürich and Aena SME 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 Flughafen Zürich and Aena SME into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flughafen Zrich AG and Aena SME SA, you can compare the effects of market volatilities on Flughafen Zürich and Aena SME 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 Flughafen Zürich with a short position of Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flughafen Zürich and Aena SME.

Diversification Opportunities for Flughafen Zürich and Aena SME

0.37

Correlation Coefficient

Flughafen Zürich  Aena SME

Weak diversification

The 3 months correlation between Flughafen and Aena is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Flughafen Zrich AG and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME SA and Flughafen Zürich 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 Flughafen Zrich AG are associated (or correlated) with Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Flughafen Zürich i.e., Flughafen Zürich and Aena SME go up and down completely randomly.

Pair Corralation between Flughafen Zürich and Aena SME

Assuming the 90 days horizon Flughafen Zrich AG is expected to under-perform the Aena SME. In addition to that, Flughafen Zürich is 1.46 times more volatile than Aena SME SA. It trades about -0.04 of its total potential returns per unit of risk. Aena SME SA is currently generating about 0.11 per unit of volatility. If you would invest  20,082  in Aena SME SA on August 31, 2024 and sell it today you would earn a total of  1,338  from holding Aena SME SA or generate 6.66% return on investment over 90 days.

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

Flughafen Zrich AG  vs.  Aena SME SA

Flughafen Zrich AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flughafen Zrich AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Flughafen Zürich is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aena SME SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aena SME may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Flughafen Zürich and Aena SME

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

The idea behind Flughafen Zrich AG and Aena SME SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.