Correlation Between Getlink SE and Aeroports

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

By analyzing existing cross correlation between Getlink SE and Aeroports de Paris, you can compare the effects of market volatilities on Getlink SE and Aeroports 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 Getlink SE with a short position of Aeroports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getlink SE and Aeroports.

Diversification Opportunities for Getlink SE and Aeroports

0.89

Correlation Coefficient

Getlink SE  Aeroports

Very poor diversification

The 3 months correlation between Getlink and Aeroports is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Getlink SE and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris and Getlink SE 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 Getlink SE are associated (or correlated) with Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of Getlink SE i.e., Getlink SE and Aeroports go up and down completely randomly.

Pair Corralation between Getlink SE and Aeroports

Assuming the 90 days trading horizon Getlink SE is expected to under-perform the Aeroports. But the stock apears to be less risky and, when comparing its historical volatility, Getlink SE is 1.66 times less risky than Aeroports. The stock trades about -0.04 of its potential returns per unit of risk. The Aeroports de Paris is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  11,540  in Aeroports de Paris on September 13, 2024 and sell it today you would lose (150.00) from holding Aeroports de Paris or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Getlink SE  vs.  Aeroports de Paris

Getlink SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getlink SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Getlink SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aeroports de Paris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeroports de Paris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aeroports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Getlink SE and Aeroports

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

The idea behind Getlink SE and Aeroports de Paris 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.