Correlation Between Flughafen Zrich and Aena SME

Can any of the company-specific risk be diversified away by investing in both Flughafen Zrich 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 Zrich 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 Zrich 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 Zrich with a short position of Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flughafen Zrich and Aena SME.

Diversification Opportunities for Flughafen Zrich and Aena SME

0.23

Correlation Coefficient

Flughafen Zrich  Aena SME

Modest diversification

The 3 months correlation between Flughafen and Aena is 0.23. 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 Zrich 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 Zrich i.e., Flughafen Zrich and Aena SME go up and down completely randomly.

Pair Corralation between Flughafen Zrich and Aena SME

Assuming the 90 days horizon Flughafen Zrich AG is expected to under-perform the Aena SME. But the pink sheet apears to be less risky and, when comparing its historical volatility, Flughafen Zrich AG is 1.28 times less risky than Aena SME. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Aena SME SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,088  in Aena SME SA on December 30, 2024 and sell it today you would earn a total of  289.00  from holding Aena SME SA or generate 13.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Flughafen Zrich AG  vs.  Aena SME SA

Flughafen Zrich AG

Risk-Adjusted Performance

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 Zrich 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aena SME showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flughafen Zrich and Aena SME

The main advantage of trading using opposite Flughafen Zrich and Aena SME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flughafen Zrich 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.