Correlation Between Ribbon Communications and Aegean Airlines

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

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

Diversification Opportunities for Ribbon Communications and Aegean Airlines

-0.11

Correlation Coefficient

Ribbon Communications  Aegean Airlines

Good diversification

The 3 months correlation between Ribbon and Aegean is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ribbon Communications 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 Ribbon Communications 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 Ribbon Communications 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 Ribbon Communications i.e., Ribbon Communications and Aegean Airlines go up and down completely randomly.

Pair Corralation between Ribbon Communications and Aegean Airlines

Assuming the 90 days trading horizon Ribbon Communications is expected to generate 1.44 times more return on investment than Aegean Airlines. However, Ribbon Communications is 1.44 times more volatile than Aegean Airlines SA. It trades about 0.13 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.02 per unit of risk. If you would invest  336.00  in Ribbon Communications on October 25, 2024 and sell it today you would earn a total of  60.00  from holding Ribbon Communications or generate 17.86% return on investment over 90 days.

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

Ribbon Communications  vs.  Aegean Airlines SA

Ribbon Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ribbon Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Ribbon Communications 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 Ribbon Communications and Aegean Airlines

The main advantage of trading using opposite Ribbon Communications and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ribbon Communications 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 Ribbon Communications 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.