Correlation Between Grupo Aeroportuario and Aena SME

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

By analyzing existing cross correlation between Grupo Aeroportuario del and Aena SME SA, you can compare the effects of market volatilities on Grupo Aeroportuario and Aena SME 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 Grupo Aeroportuario with a short position of Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aeroportuario and Aena SME.

Diversification Opportunities for Grupo Aeroportuario and Aena SME

0.61

Correlation Coefficient

Grupo Aeroportuario  Aena SME

Poor diversification

The 3 months correlation between Grupo and Aena is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME SA and Grupo Aeroportuario 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 Grupo Aeroportuario del are associated (or correlated) with Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Grupo Aeroportuario i.e., Grupo Aeroportuario and Aena SME go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and Aena SME

Given the investment horizon of 90 days Grupo Aeroportuario is expected to generate 6.2 times less return on investment than Aena SME. In addition to that, Grupo Aeroportuario is 1.57 times more volatile than Aena SME SA. It trades about 0.01 of its total potential returns per unit of risk. Aena SME SA is currently generating about 0.05 per unit of volatility. If you would invest  1,487  in Aena SME SA on August 18, 2024 and sell it today you would earn a total of  565.00  from holding Aena SME SA or generate 38.0% return on investment over 90 days.

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

Grupo Aeroportuario del  vs.  Aena SME SA

Grupo Aeroportuario del

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Aeroportuario del has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aena SME SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Aena SME is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Aeroportuario and Aena SME

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

The idea behind Grupo Aeroportuario del and Aena SME 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.