Correlation Between PACIFIC and Air Transport

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

By analyzing existing cross correlation between PACIFIC GAS AND and Air Transport Services, you can compare the effects of market volatilities on PACIFIC and Air Transport 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 PACIFIC with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACIFIC and Air Transport.

Diversification Opportunities for PACIFIC and Air Transport

-0.17

Correlation Coefficient

PACIFIC  Air Transport

Good diversification

The 3 months correlation between PACIFIC and Air is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC GAS AND and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and PACIFIC 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 PACIFIC GAS AND are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of PACIFIC i.e., PACIFIC and Air Transport go up and down completely randomly.

Pair Corralation between PACIFIC and Air Transport

Assuming the 90 days trading horizon PACIFIC GAS AND is expected to under-perform the Air Transport. In addition to that, PACIFIC is 3.76 times more volatile than Air Transport Services. It trades about 0.0 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.25 per unit of volatility. If you would invest  2,190  in Air Transport Services on December 22, 2024 and sell it today you would earn a total of  43.00  from holding Air Transport Services or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

PACIFIC GAS AND  vs.  Air Transport Services

PACIFIC GAS AND

Risk-Adjusted Performance

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Air Transport Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PACIFIC and Air Transport

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

The idea behind PACIFIC GAS AND and Air Transport Services 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.