Correlation Between AEGEAN AIRLINES and Apple

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

By analyzing existing cross correlation between AEGEAN AIRLINES and Apple Inc, you can compare the effects of market volatilities on AEGEAN AIRLINES and Apple 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 AEGEAN AIRLINES with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Apple.

Diversification Opportunities for AEGEAN AIRLINES and Apple

-0.32

Correlation Coefficient

AEGEAN AIRLINES  Apple

Very good diversification

The 3 months correlation between AEGEAN and Apple is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and AEGEAN AIRLINES 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 AEGEAN AIRLINES are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Apple go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and Apple

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to under-perform the Apple. In addition to that, AEGEAN AIRLINES is 1.12 times more volatile than Apple Inc. It trades about -0.05 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.21 per unit of volatility. If you would invest  20,316  in Apple Inc on September 22, 2024 and sell it today you would earn a total of  3,444  from holding Apple Inc or generate 16.95% return on investment over 90 days.

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

AEGEAN AIRLINES  vs.  Apple Inc

AEGEAN AIRLINES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEGEAN AIRLINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AEGEAN AIRLINES is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Apple Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEGEAN AIRLINES and Apple

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

The idea behind AEGEAN AIRLINES and Apple Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.