Correlation Between International Consolidated and Aegean Airlines

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

By analyzing existing cross correlation between International Consolidated Airlines and Aegean Airlines SA, you can compare the effects of market volatilities on International Consolidated and Aegean Airlines 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 International Consolidated with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Aegean Airlines.

Diversification Opportunities for International Consolidated and Aegean Airlines

-0.39

Correlation Coefficient

International Consolidated  Aegean Airlines

Very good diversification

The 3 months correlation between International and Aegean is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of International Consolidated i.e., International Consolidated and Aegean Airlines go up and down completely randomly.

Pair Corralation between International Consolidated and Aegean Airlines

Assuming the 90 days horizon International Consolidated Airlines is expected to generate 1.07 times more return on investment than Aegean Airlines. However, International Consolidated is 1.07 times more volatile than Aegean Airlines SA. It trades about 0.61 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.16 per unit of risk. If you would invest  298.00  in International Consolidated Airlines on September 27, 2024 and sell it today you would earn a total of  72.00  from holding International Consolidated Airlines or generate 24.16% return on investment over 90 days.

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

International Consolidated Air  vs.  Aegean Airlines SA

International Consolidated

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Aegean Airlines SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegean Airlines SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aegean Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with International Consolidated and Aegean Airlines

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

The idea behind International Consolidated Airlines and Aegean Airlines 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.