Correlation Between Laureate Education and Aegean Airlines

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

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

Diversification Opportunities for Laureate Education and Aegean Airlines

-0.64

Correlation Coefficient

Laureate Education  Aegean Airlines

Excellent diversification

The 3 months correlation between Laureate and Aegean is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education 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 Laureate Education 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 Laureate Education 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 Laureate Education i.e., Laureate Education and Aegean Airlines go up and down completely randomly.

Pair Corralation between Laureate Education and Aegean Airlines

Assuming the 90 days trading horizon Laureate Education is expected to generate 23.99 times less return on investment than Aegean Airlines. In addition to that, Laureate Education is 1.28 times more volatile than Aegean Airlines SA. It trades about 0.01 of its total potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.2 per unit of volatility. If you would invest  1,005  in Aegean Airlines SA on October 11, 2024 and sell it today you would earn a total of  37.00  from holding Aegean Airlines SA or generate 3.68% return on investment over 90 days.

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

Laureate Education  vs.  Aegean Airlines SA

Laureate Education

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Laureate Education are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Laureate Education reported solid returns over the last few months and may actually be approaching a breakup point.

Aegean Airlines SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aegean Airlines is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Laureate Education and Aegean Airlines

The main advantage of trading using opposite Laureate Education and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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 Laureate Education 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.