Correlation Between Aedas Homes and Gentex

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Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Gentex 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 Gentex 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 Gentex, you can compare the effects of market volatilities on Aedas Homes and Gentex 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 Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Gentex.

Diversification Opportunities for Aedas Homes and Gentex

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Aedas and Gentex is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Aedas Homes i.e., Aedas Homes and Gentex go up and down completely randomly.

Pair Corralation between Aedas Homes and Gentex

Assuming the 90 days horizon Aedas Homes SA is expected to generate 2.18 times more return on investment than Gentex. However, Aedas Homes is 2.18 times more volatile than Gentex. It trades about 0.06 of its potential returns per unit of risk. Gentex is currently generating about -0.26 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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy94.74%
ValuesDaily Returns

Aedas Homes SA  vs.  Gentex

 Performance 
       Timeline  
Aedas Homes SA 

Risk-Adjusted Performance

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Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aedas Homes is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Gentex 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aedas Homes and Gentex Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aedas Homes and Gentex

The main advantage of trading using opposite Aedas Homes and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.
The idea behind Aedas Homes SA and Gentex 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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