Correlation Between Aega ASA and Airthings ASA

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

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

Diversification Opportunities for Aega ASA and Airthings ASA

-0.08

Correlation Coefficient

Aega ASA  Airthings ASA

Good diversification

The 3 months correlation between Aega and Airthings is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aega ASA and Airthings ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airthings ASA and Aega ASA 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 Aega ASA are associated (or correlated) with Airthings ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airthings ASA has no effect on the direction of Aega ASA i.e., Aega ASA and Airthings ASA go up and down completely randomly.

Pair Corralation between Aega ASA and Airthings ASA

Assuming the 90 days trading horizon Aega ASA is expected to generate 10.92 times more return on investment than Airthings ASA. However, Aega ASA is 10.92 times more volatile than Airthings ASA. It trades about 0.13 of its potential returns per unit of risk. Airthings ASA is currently generating about 0.02 per unit of risk. If you would invest  40.00  in Aega ASA on September 15, 2024 and sell it today you would earn a total of  46.00  from holding Aega ASA or generate 115.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Aega ASA  vs.  Airthings ASA

Aega ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aega ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Aega ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Airthings ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Airthings ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Airthings ASA is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Aega ASA and Airthings ASA

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

The idea behind Aega ASA and Airthings ASA 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 Stocks Directory module to find actively traded stocks across global markets.