Correlation Between Aegean Airlines and China Eastern

Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and China Eastern 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 China Eastern 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 China Eastern Airlines, you can compare the effects of market volatilities on Aegean Airlines and China Eastern 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 China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and China Eastern.

Diversification Opportunities for Aegean Airlines and China Eastern

0.74

Correlation Coefficient

Aegean Airlines  China Eastern

Poor diversification

The 3 months correlation between Aegean and China is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines 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 China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and China Eastern go up and down completely randomly.

Pair Corralation between Aegean Airlines and China Eastern

Assuming the 90 days horizon Aegean Airlines is expected to generate 4.76 times less return on investment than China Eastern. But when comparing it to its historical volatility, Aegean Airlines SA is 1.82 times less risky than China Eastern. It trades about 0.01 of its potential returns per unit of risk. China Eastern Airlines is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  31.00  in China Eastern Airlines on March 25, 2025 and sell it today you would earn a total of  0.00  from holding China Eastern Airlines or generate 0.0% return on investment over 90 days.

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

Aegean Airlines SA  vs.  China Eastern Airlines

Aegean Airlines SA

Risk-Adjusted Performance

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 nearly stable basic indicators, Aegean Airlines is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

China Eastern Airlines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Eastern Airlines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China Eastern 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 China Eastern

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

The idea behind Aegean Airlines SA and China Eastern Airlines 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.