Correlation Between Flughafen Zürich and Auckland International

Can any of the company-specific risk be diversified away by investing in both Flughafen Zürich and Auckland 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 Flughafen Zürich and Auckland International 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 Auckland International Airport, you can compare the effects of market volatilities on Flughafen Zürich and Auckland 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 Flughafen Zürich with a short position of Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flughafen Zürich and Auckland International.

Diversification Opportunities for Flughafen Zürich and Auckland International

0.4

Correlation Coefficient

Flughafen Zürich  Auckland International

Very weak diversification

The 3 months correlation between Flughafen and Auckland is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Flughafen Zrich AG and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International 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 Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Flughafen Zürich i.e., Flughafen Zürich and Auckland International go up and down completely randomly.

Pair Corralation between Flughafen Zürich and Auckland International

Assuming the 90 days horizon Flughafen Zürich is expected to generate 6.84 times less return on investment than Auckland International. But when comparing it to its historical volatility, Flughafen Zrich AG is 2.28 times less risky than Auckland International. It trades about 0.02 of its potential returns per unit of risk. Auckland International Airport is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,111  in Auckland International Airport on November 29, 2024 and sell it today you would earn a total of  120.00  from holding Auckland International Airport or generate 5.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Flughafen Zrich AG  vs.  Auckland International Airport

Flughafen Zrich AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flughafen Zrich AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Auckland International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auckland International Airport are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Auckland International may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Flughafen Zürich and Auckland International

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

The idea behind Flughafen Zrich AG and Auckland International Airport 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.