Correlation Between Copa Holdings and Aegean Airlines

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

Diversification Opportunities for Copa Holdings and Aegean Airlines

-0.2

Correlation Coefficient

Copa Holdings  Aegean Airlines

Good diversification

The 3 months correlation between Copa and Aegean is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA 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 Copa 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 Copa Holdings SA 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 Copa Holdings i.e., Copa Holdings and Aegean Airlines go up and down completely randomly.

Pair Corralation between Copa Holdings and Aegean Airlines

Considering the 90-day investment horizon Copa Holdings is expected to generate 6.93 times less return on investment than Aegean Airlines. But when comparing it to its historical volatility, Copa Holdings SA is 1.14 times less risky than Aegean Airlines. It trades about 0.01 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Aegean Airlines SA on February 1, 2025 and sell it today you would earn a total of  523.00  from holding Aegean Airlines SA or generate 65.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Copa Holdings SA  vs.  Aegean Airlines SA

Copa Holdings SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Copa Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aegean Airlines SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aegean Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Copa Holdings and Aegean Airlines

The main advantage of trading using opposite Copa Holdings and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa 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 Copa Holdings SA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.