Correlation Between Flughafen Zürich and Aeroports

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

By analyzing existing cross correlation between Flughafen Zrich AG and Aeroports de Paris, you can compare the effects of market volatilities on Flughafen Zürich and Aeroports 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 Flughafen Zürich with a short position of Aeroports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flughafen Zürich and Aeroports.

Diversification Opportunities for Flughafen Zürich and Aeroports

0.34

Correlation Coefficient

Flughafen Zürich  Aeroports

Weak diversification

The 3 months correlation between Flughafen and Aeroports is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Flughafen Zrich AG and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris and Flughafen Zürich 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 Flughafen Zrich AG are associated (or correlated) with Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of Flughafen Zürich i.e., Flughafen Zürich and Aeroports go up and down completely randomly.

Pair Corralation between Flughafen Zürich and Aeroports

Assuming the 90 days horizon Flughafen Zrich AG is expected to generate 0.47 times more return on investment than Aeroports. However, Flughafen Zrich AG is 2.13 times less risky than Aeroports. It trades about 0.05 of its potential returns per unit of risk. Aeroports de Paris is currently generating about 0.0 per unit of risk. If you would invest  634.00  in Flughafen Zrich AG on August 31, 2024 and sell it today you would earn a total of  252.00  from holding Flughafen Zrich AG or generate 39.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.3%
Values	Daily Returns

Flughafen Zrich AG  vs.  Aeroports de Paris

Flughafen Zrich AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flughafen Zrich AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Flughafen Zürich is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aeroports de Paris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeroports de Paris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Aeroports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Flughafen Zürich and Aeroports

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

The idea behind Flughafen Zrich AG and Aeroports de Paris 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.