Correlation Between Aegean Airlines and Advanced Drainage

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

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

Diversification Opportunities for Aegean Airlines and Advanced Drainage

0.09

Correlation Coefficient

Aegean Airlines  Advanced Drainage

Significant diversification

The 3 months correlation between Aegean and Advanced is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Advanced Drainage Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Drainage Systems and Aegean Airlines 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 Aegean Airlines SA are associated (or correlated) with Advanced Drainage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Drainage Systems has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Advanced Drainage go up and down completely randomly.

Pair Corralation between Aegean Airlines and Advanced Drainage

Assuming the 90 days horizon Aegean Airlines SA is expected to generate 0.98 times more return on investment than Advanced Drainage. However, Aegean Airlines SA is 1.02 times less risky than Advanced Drainage. It trades about 0.12 of its potential returns per unit of risk. Advanced Drainage Systems is currently generating about 0.02 per unit of risk. If you would invest  1,084  in Aegean Airlines SA on April 23, 2025 and sell it today you would earn a total of  176.00  from holding Aegean Airlines SA or generate 16.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Aegean Airlines SA  vs.  Advanced Drainage Systems

Aegean Airlines SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aegean Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Advanced Drainage Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Drainage Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Advanced Drainage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aegean Airlines and Advanced Drainage

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

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