Correlation Between Japan Airport and Aena SME

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

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

Diversification Opportunities for Japan Airport and Aena SME

-0.5

Correlation Coefficient

Japan Airport  Aena SME

Very good diversification

The 3 months correlation between Japan and Aena is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Japan Airport Terminal 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 Japan Airport 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 Japan Airport Terminal 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 Japan Airport i.e., Japan Airport and Aena SME go up and down completely randomly.

Pair Corralation between Japan Airport and Aena SME

Assuming the 90 days horizon Japan Airport Terminal is expected to under-perform the Aena SME. In addition to that, Japan Airport is 1.46 times more volatile than Aena SME SA. It trades about -0.12 of its total potential returns per unit of risk. Aena SME SA is currently generating about 0.18 per unit of volatility. If you would invest  20,720  in Aena SME SA on December 28, 2024 and sell it today you would earn a total of  2,948  from holding Aena SME SA or generate 14.23% return on investment over 90 days.

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

Japan Airport Terminal  vs.  Aena SME SA

Japan Airport Terminal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Japan Airport Terminal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aena SME SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aena SME reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Japan Airport and Aena SME

The main advantage of trading using opposite Japan Airport and Aena SME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Airport 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 Japan Airport Terminal 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.