Correlation Between SPACE and Auckland International

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

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

Diversification Opportunities for SPACE and Auckland International

-0.62

Correlation Coefficient

SPACE  Auckland International

Excellent diversification

The 3 months correlation between SPACE and Auckland is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International and SPACE 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 SPACE are associated (or correlated) with Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of SPACE i.e., SPACE and Auckland International go up and down completely randomly.

Pair Corralation between SPACE and Auckland International

Assuming the 90 days horizon SPACE is expected to generate 1.89 times more return on investment than Auckland International. However, SPACE is 1.89 times more volatile than Auckland International Airport. It trades about 0.24 of its potential returns per unit of risk. Auckland International Airport is currently generating about -0.04 per unit of risk. If you would invest  31.00  in SPACE on September 5, 2024 and sell it today you would earn a total of  29.00  from holding SPACE or generate 93.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

SPACE  vs.  Auckland International Airport

SPACE

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Auckland International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auckland International Airport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SPACE and Auckland International

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

The idea behind SPACE and Auckland International Airport 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.