Correlation Between AEGEAN AIRLINES and Universal Display

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

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

Diversification Opportunities for AEGEAN AIRLINES and Universal Display

0.69

Correlation Coefficient

AEGEAN AIRLINES  Universal Display

Poor diversification

The 3 months correlation between AEGEAN and Universal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Universal Display go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and Universal Display

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.57 times more return on investment than Universal Display. However, AEGEAN AIRLINES is 1.76 times less risky than Universal Display. It trades about -0.04 of its potential returns per unit of risk. Universal Display is currently generating about -0.15 per unit of risk. If you would invest  1,054  in AEGEAN AIRLINES on September 21, 2024 and sell it today you would lose (46.00) from holding AEGEAN AIRLINES or give up 4.36% of portfolio value over 90 days.

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

AEGEAN AIRLINES  vs.  Universal Display

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Universal Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Display has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AEGEAN AIRLINES and Universal Display

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

The idea behind AEGEAN AIRLINES and Universal Display 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.