Correlation Between Aedas Homes and Flight Centre
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Flight Centre 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 Flight Centre 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 Flight Centre Travel, you can compare the effects of market volatilities on Aedas Homes and Flight Centre 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 Flight Centre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Flight Centre.
Diversification Opportunities for Aedas Homes and Flight Centre
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aedas and Flight is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Flight Centre Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flight Centre Travel 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 Flight Centre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flight Centre Travel has no effect on the direction of Aedas Homes i.e., Aedas Homes and Flight Centre go up and down completely randomly.
Pair Corralation between Aedas Homes and Flight Centre
Assuming the 90 days horizon Aedas Homes SA is expected to generate 0.82 times more return on investment than Flight Centre. However, Aedas Homes SA is 1.22 times less risky than Flight Centre. It trades about 0.11 of its potential returns per unit of risk. Flight Centre Travel is currently generating about 0.0 per unit of risk. If you would invest 1,940 in Aedas Homes SA on November 28, 2024 and sell it today you would earn a total of 760.00 from holding Aedas Homes SA or generate 39.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Aedas Homes SA vs. Flight Centre Travel
Performance |
| Timeline |
| Aedas Homes SA |
| Flight Centre Travel |
Aedas Homes and Flight Centre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Flight Centre
The main advantage of trading using opposite Aedas Homes and Flight Centre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Flight Centre 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 Flight Centre will offset losses from the drop in Flight Centre's long position.| Aedas Homes vs. Silicon Motion Technology | Aedas Homes vs. DETALION GAMES SA | Aedas Homes vs. Boyd Gaming | Aedas Homes vs. Mitsui Chemicals |
| Flight Centre vs. MELIA HOTELS | Flight Centre vs. Meli Hotels International | Flight Centre vs. Sinopec Shanghai Petrochemical | Flight Centre vs. MHP Hotel AG |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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