Correlation Between SkyWest and Nok Airlines

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

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

Diversification Opportunities for SkyWest and Nok Airlines

0.0

Correlation Coefficient

SkyWest  Nok Airlines

Pay attention - limited upside

The 3 months correlation between SkyWest and Nok is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Nok Airlines Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nok Airlines Public and SkyWest 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 SkyWest are associated (or correlated) with Nok Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nok Airlines Public has no effect on the direction of SkyWest i.e., SkyWest and Nok Airlines go up and down completely randomly.

Pair Corralation between SkyWest and Nok Airlines

If you would invest  7,887  in SkyWest on September 17, 2024 and sell it today you would earn a total of  2,773  from holding SkyWest or generate 35.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

SkyWest  vs.  Nok Airlines Public

SkyWest

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SkyWest showed solid returns over the last few months and may actually be approaching a breakup point.

Nok Airlines Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nok Airlines Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Nok Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SkyWest and Nok Airlines

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

The idea behind SkyWest and Nok Airlines Public 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.