Correlation Between Airports and Grupo Aeroportuario

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

By analyzing existing cross correlation between Airports of Thailand and Grupo Aeroportuario del, you can compare the effects of market volatilities on Airports and Grupo Aeroportuario 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 Airports with a short position of Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Grupo Aeroportuario.

Diversification Opportunities for Airports and Grupo Aeroportuario

-0.1

Correlation Coefficient

Airports  Grupo Aeroportuario

Good diversification

The 3 months correlation between Airports and Grupo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del and Airports 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 Airports of Thailand are associated (or correlated) with Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Airports i.e., Airports and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Airports and Grupo Aeroportuario

Assuming the 90 days trading horizon Airports of Thailand is expected to generate 3.43 times more return on investment than Grupo Aeroportuario. However, Airports is 3.43 times more volatile than Grupo Aeroportuario del. It trades about 0.13 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about 0.02 per unit of risk. If you would invest  86.00  in Airports of Thailand on September 12, 2024 and sell it today you would earn a total of  80.00  from holding Airports of Thailand or generate 93.02% return on investment over 90 days.

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

Airports of Thailand  vs.  Grupo Aeroportuario del

Airports of Thailand

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Airports of Thailand are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Airports reported solid returns over the last few months and may actually be approaching a breakup point.

Grupo Aeroportuario del

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Airports and Grupo Aeroportuario

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

The idea behind Airports of Thailand and Grupo Aeroportuario del 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.