Correlation Between Aedas Homes and HomeToGo
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and HomeToGo 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 HomeToGo 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 HomeToGo SE, you can compare the effects of market volatilities on Aedas Homes and HomeToGo 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 HomeToGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and HomeToGo.
Diversification Opportunities for Aedas Homes and HomeToGo
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aedas and HomeToGo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE 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 HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Aedas Homes i.e., Aedas Homes and HomeToGo go up and down completely randomly.
Pair Corralation between Aedas Homes and HomeToGo
Assuming the 90 days horizon Aedas Homes SA is expected to generate 0.65 times more return on investment than HomeToGo. However, Aedas Homes SA is 1.54 times less risky than HomeToGo. It trades about -0.1 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.06 per unit of risk. If you would invest 2,585 in Aedas Homes SA on September 1, 2024 and sell it today you would lose (110.00) from holding Aedas Homes SA or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. HomeToGo SE
Performance |
| Timeline |
| Aedas Homes SA |
| HomeToGo SE |
Aedas Homes and HomeToGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and HomeToGo
The main advantage of trading using opposite Aedas Homes and HomeToGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, HomeToGo 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 HomeToGo will offset losses from the drop in HomeToGo's long position.The idea behind Aedas Homes SA and HomeToGo SE 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.| HomeToGo vs. Alphabet Class A | HomeToGo vs. Alphabet Class A | HomeToGo vs. Meta Platforms | HomeToGo vs. Tencent Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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