Correlation Between Aedas Homes and BP PLC
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and BP PLC 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 Aedas Homes and BP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SA and BP PLC DZ1, you can compare the effects of market volatilities on Aedas Homes and BP PLC 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 Aedas Homes with a short position of BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and BP PLC.
Diversification Opportunities for Aedas Homes and BP PLC
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aedas and BPE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and BP PLC DZ1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC DZ1 and Aedas Homes 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 Aedas Homes SA are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC DZ1 has no effect on the direction of Aedas Homes i.e., Aedas Homes and BP PLC go up and down completely randomly.
Pair Corralation between Aedas Homes and BP PLC
Assuming the 90 days horizon Aedas Homes SA is expected to under-perform the BP PLC. But the stock apears to be less risky and, when comparing its historical volatility, Aedas Homes SA is 1.92 times less risky than BP PLC. The stock trades about -0.04 of its potential returns per unit of risk. The BP PLC DZ1 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 434.00 in BP PLC DZ1 on September 15, 2024 and sell it today you would earn a total of 38.00 from holding BP PLC DZ1 or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. BP PLC DZ1
Performance |
| Timeline |
| Aedas Homes SA |
| BP PLC DZ1 |
Aedas Homes and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and BP PLC
The main advantage of trading using opposite Aedas Homes and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Aedas Homes vs. Lennar | Aedas Homes vs. Sekisui Chemical Co | Aedas Homes vs. Superior Plus Corp | Aedas Homes vs. SIVERS SEMICONDUCTORS AB |
| BP PLC vs. Autohome ADR | BP PLC vs. Aedas Homes SA | BP PLC vs. LGI Homes | BP PLC vs. Penta Ocean Construction Co |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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