Correlation Between Saker Aviation and Auckland International

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

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

Diversification Opportunities for Saker Aviation and Auckland International

-0.59

Correlation Coefficient

Saker Aviation  Auckland International

Excellent diversification

The 3 months correlation between Saker and Auckland is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Saker Aviation Services and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International and Saker Aviation 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 Saker Aviation Services 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 Saker Aviation i.e., Saker Aviation and Auckland International go up and down completely randomly.

Pair Corralation between Saker Aviation and Auckland International

Given the investment horizon of 90 days Saker Aviation Services is expected to generate 3.44 times more return on investment than Auckland International. However, Saker Aviation is 3.44 times more volatile than Auckland International Airport. It trades about 0.26 of its potential returns per unit of risk. Auckland International Airport is currently generating about -0.15 per unit of risk. If you would invest  851.00  in Saker Aviation Services on March 20, 2024 and sell it today you would earn a total of  349.00  from holding Saker Aviation Services or generate 41.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Saker Aviation Services  vs.  Auckland International Airport

Saker Aviation Services

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Saker Aviation Services are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Saker Aviation unveiled 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. Despite nearly stable fundamental indicators, Auckland International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Saker Aviation and Auckland International

The main advantage of trading using opposite Saker Aviation and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saker Aviation 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 Saker Aviation Services 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.