Correlation Between INSURANCE AUST and Aegean Airlines

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

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

Diversification Opportunities for INSURANCE AUST and Aegean Airlines

-0.22

Correlation Coefficient

INSURANCE AUST  Aegean Airlines

Very good diversification

The 3 months correlation between INSURANCE and Aegean is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP 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 INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Aegean Airlines go up and down completely randomly.

Pair Corralation between INSURANCE AUST and Aegean Airlines

Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to under-perform the Aegean Airlines. In addition to that, INSURANCE AUST is 1.2 times more volatile than Aegean Airlines SA. It trades about -0.04 of its total potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.09 per unit of volatility. If you would invest  993.00  in Aegean Airlines SA on December 2, 2024 and sell it today you would earn a total of  74.00  from holding Aegean Airlines SA or generate 7.45% return on investment over 90 days.

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

INSURANCE AUST GRP  vs.  Aegean Airlines SA

INSURANCE AUST GRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days INSURANCE AUST GRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aegean Airlines SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aegean Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INSURANCE AUST and Aegean Airlines

The main advantage of trading using opposite INSURANCE AUST and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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 INSURANCE AUST GRP 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.