Correlation Between Wizz Air and Indutrade

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

By analyzing existing cross correlation between Wizz Air Holdings and Indutrade AB, you can compare the effects of market volatilities on Wizz Air and Indutrade 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 Wizz Air with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Indutrade.

Diversification Opportunities for Wizz Air and Indutrade

-0.38

Correlation Coefficient

Wizz Air  Indutrade

Very good diversification

The 3 months correlation between Wizz and Indutrade is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Wizz Air 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 Wizz Air Holdings are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Wizz Air i.e., Wizz Air and Indutrade go up and down completely randomly.

Pair Corralation between Wizz Air and Indutrade

Assuming the 90 days trading horizon Wizz Air Holdings is expected to under-perform the Indutrade. In addition to that, Wizz Air is 2.5 times more volatile than Indutrade AB. It trades about -0.09 of its total potential returns per unit of risk. Indutrade AB is currently generating about -0.04 per unit of volatility. If you would invest  28,650  in Indutrade AB on October 12, 2024 and sell it today you would lose (310.00) from holding Indutrade AB or give up 1.08% of portfolio value over 90 days.

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

Wizz Air Holdings  vs.  Indutrade AB

Wizz Air Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wizz Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Indutrade is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wizz Air and Indutrade

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

The idea behind Wizz Air Holdings and Indutrade AB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.