Correlation Between Aedas Homes and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on Aedas Homes and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Chesapeake Utilities.
Diversification Opportunities for Aedas Homes and Chesapeake Utilities
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aedas and Chesapeake is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Aedas Homes i.e., Aedas Homes and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Aedas Homes and Chesapeake Utilities
Assuming the 90 days horizon Aedas Homes SA is expected to generate 1.53 times more return on investment than Chesapeake Utilities. However, Aedas Homes is 1.53 times more volatile than Chesapeake Utilities. It trades about 0.06 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.01 per unit of risk. If you would invest 2,500 in Aedas Homes SA on October 26, 2024 and sell it today you would earn a total of 50.00 from holding Aedas Homes SA or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. Chesapeake Utilities
Performance |
| Timeline |
| Aedas Homes SA |
| Chesapeake Utilities |
Aedas Homes and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Chesapeake Utilities
The main advantage of trading using opposite Aedas Homes and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Aedas Homes vs. ePlay Digital | Aedas Homes vs. COLUMBIA SPORTSWEAR | Aedas Homes vs. PLAYTECH | Aedas Homes vs. NEWELL RUBBERMAID |
| Chesapeake Utilities vs. alstria office REIT AG | Chesapeake Utilities vs. American Eagle Outfitters | Chesapeake Utilities vs. SCANSOURCE | Chesapeake Utilities vs. Infrastrutture Wireless Italiane |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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