Correlation Between PSI Software and Aegean Airlines

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

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

Diversification Opportunities for PSI Software and Aegean Airlines

0.39

Correlation Coefficient

PSI Software  Aegean Airlines

Weak diversification

The 3 months correlation between PSI and Aegean is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding PSI Software AG 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 PSI Software 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 PSI Software AG 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 PSI Software i.e., PSI Software and Aegean Airlines go up and down completely randomly.

Pair Corralation between PSI Software and Aegean Airlines

Assuming the 90 days trading horizon PSI Software AG is expected to generate 1.62 times more return on investment than Aegean Airlines. However, PSI Software is 1.62 times more volatile than Aegean Airlines SA. It trades about 0.17 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.13 per unit of risk. If you would invest  2,080  in PSI Software AG on December 22, 2024 and sell it today you would earn a total of  740.00  from holding PSI Software AG or generate 35.58% return on investment over 90 days.

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

PSI Software AG  vs.  Aegean Airlines SA

PSI Software AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PSI Software AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PSI Software exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aegean Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PSI Software and Aegean Airlines

The main advantage of trading using opposite PSI Software and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSI Software 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 PSI Software AG 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.