Correlation Between Insteel Industries and Aegean Airlines

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

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

Diversification Opportunities for Insteel Industries and Aegean Airlines

0.08

Correlation Coefficient

Insteel Industries  Aegean Airlines

Significant diversification

The 3 months correlation between Insteel and Aegean is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries 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 Insteel Industries 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 Insteel Industries 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 Insteel Industries i.e., Insteel Industries and Aegean Airlines go up and down completely randomly.

Pair Corralation between Insteel Industries and Aegean Airlines

Given the investment horizon of 90 days Insteel Industries is expected to generate 4.53 times less return on investment than Aegean Airlines. In addition to that, Insteel Industries is 1.13 times more volatile than Aegean Airlines SA. It trades about 0.05 of its total potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.23 per unit of volatility. If you would invest  1,159  in Aegean Airlines SA on May 7, 2025 and sell it today you would earn a total of  295.00  from holding Aegean Airlines SA or generate 25.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Insteel Industries  vs.  Aegean Airlines SA

Insteel Industries

Risk-Adjusted Performance

Soft

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

Aegean Airlines SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 18 (%) 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 Insteel Industries and Aegean Airlines

The main advantage of trading using opposite Insteel Industries and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries 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 Insteel Industries 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.