Correlation Between Hawaiian Holdings and Aegean Airlines

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

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

Diversification Opportunities for Hawaiian Holdings and Aegean Airlines

0.7

Correlation Coefficient

Hawaiian Holdings  Aegean Airlines

Poor diversification

The 3 months correlation between Hawaiian and Aegean is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Holdings and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and Hawaiian Holdings 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 Hawaiian Holdings are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Hawaiian Holdings i.e., Hawaiian Holdings and Aegean Airlines go up and down completely randomly.

Pair Corralation between Hawaiian Holdings and Aegean Airlines

Allowing for the 90-day total investment horizon Hawaiian Holdings is expected to generate 1.11 times less return on investment than Aegean Airlines. In addition to that, Hawaiian Holdings is 3.6 times more volatile than Aegean Airlines SA. It trades about 0.02 of its total potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.07 per unit of volatility. If you would invest  595.00  in Aegean Airlines SA on January 24, 2024 and sell it today you would earn a total of  722.00  from holding Aegean Airlines SA or generate 121.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hawaiian Holdings  vs.  Aegean Airlines SA

Hawaiian Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawaiian Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal 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.

Aegean Airlines SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegean Airlines SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Hawaiian Holdings and Aegean Airlines

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

The idea behind Hawaiian Holdings and Aegean Airlines SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.