Correlation Between Aedas Homes and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Dairy Farm 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 Dairy Farm 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 Dairy Farm International, you can compare the effects of market volatilities on Aedas Homes and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Dairy Farm.
Diversification Opportunities for Aedas Homes and Dairy Farm
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aedas and Dairy is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Aedas Homes i.e., Aedas Homes and Dairy Farm go up and down completely randomly.
Pair Corralation between Aedas Homes and Dairy Farm
Assuming the 90 days horizon Aedas Homes SA is expected to under-perform the Dairy Farm. But the stock apears to be less risky and, when comparing its historical volatility, Aedas Homes SA is 1.9 times less risky than Dairy Farm. The stock trades about 0.0 of its potential returns per unit of risk. The Dairy Farm International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Dairy Farm International on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Dairy Farm International or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. Dairy Farm International
Performance |
| Timeline |
| Aedas Homes SA |
| Dairy Farm International |
Aedas Homes and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Dairy Farm
The main advantage of trading using opposite Aedas Homes and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Aedas Homes vs. Global Ship Lease | Aedas Homes vs. BOS BETTER ONLINE | Aedas Homes vs. SALESFORCE INC CDR | Aedas Homes vs. AIR PRODCHEMICALS |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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