Correlation Between Alaska Air and SGS SA

Can any of the company-specific risk be diversified away by investing in both Alaska Air and SGS SA 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 Alaska Air and SGS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Alaska Air and SGS SA

0.55

Correlation Coefficient

Alaska Air  SGS SA

Very weak diversification

The 3 months correlation between Alaska and SGS is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA and Alaska Air 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 Alaska Air Group are associated (or correlated) with SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Alaska Air i.e., Alaska Air and SGS SA go up and down completely randomly.

Pair Corralation between Alaska Air and SGS SA

Considering the 90-day investment horizon Alaska Air Group is expected to generate 2.35 times more return on investment than SGS SA. However, Alaska Air is 2.35 times more volatile than SGS SA. It trades about 0.05 of its potential returns per unit of risk. SGS SA is currently generating about 0.05 per unit of risk. If you would invest  4,865  in Alaska Air Group on May 4, 2025 and sell it today you would earn a total of  272.00  from holding Alaska Air Group or generate 5.59% return on investment over 90 days.

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

Alaska Air Group  vs.  SGS SA

Alaska Air Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Alaska Air may actually be approaching a critical reversion point that can send shares even higher in September 2025.

SGS SA

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Alaska Air and SGS SA

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

The idea behind Alaska Air Group and SGS 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.