Correlation Between AAC TECHNOLOGHLDGADR and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and Southwest 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 AAC TECHNOLOGHLDGADR and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and Southwest Airlines Co, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and Southwest 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 AAC TECHNOLOGHLDGADR with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and Southwest Airlines.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and Southwest Airlines
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AAC and Southwest is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR are associated (or correlated) with Southwest Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Airlines has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Southwest Airlines go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and Southwest Airlines
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to under-perform the Southwest Airlines. In addition to that, AAC TECHNOLOGHLDGADR is 1.32 times more volatile than Southwest Airlines Co. It trades about -0.13 of its total potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.02 per unit of volatility. If you would invest 2,534 in Southwest Airlines Co on March 8, 2024 and sell it today you would earn a total of 16.00 from holding Southwest Airlines Co or generate 0.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AAC TECHNOLOGHLDGADR vs. Southwest Airlines Co
Performance |
Timeline |
AAC TECHNOLOGHLDGADR |
Southwest Airlines |
AAC TECHNOLOGHLDGADR and Southwest Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and Southwest Airlines
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, Southwest 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 Southwest Airlines will offset losses from the drop in Southwest Airlines' long position.AAC TECHNOLOGHLDGADR vs. CITIUS RESOURCES LS 005 | AAC TECHNOLOGHLDGADR vs. Origin Agritech | AAC TECHNOLOGHLDGADR vs. SIVERS SEMICONDUCTORS AB | AAC TECHNOLOGHLDGADR vs. Norsk Hydro ASA |
Southwest Airlines vs. RYANAIR HLDGS ADR | Southwest Airlines vs. CITIUS RESOURCES LS 005 | Southwest Airlines vs. Origin Agritech | Southwest Airlines vs. SIVERS SEMICONDUCTORS AB |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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