Correlation Between Aedas Homes and Brinks
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Brinks 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 Brinks 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 The Brinks, you can compare the effects of market volatilities on Aedas Homes and Brinks 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 Brinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Brinks.
Diversification Opportunities for Aedas Homes and Brinks
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aedas and Brinks is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and The Brinks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks has no effect on the direction of Aedas Homes i.e., Aedas Homes and Brinks go up and down completely randomly.
Pair Corralation between Aedas Homes and Brinks
Assuming the 90 days horizon Aedas Homes SA is expected to generate 2.01 times more return on investment than Brinks. However, Aedas Homes is 2.01 times more volatile than The Brinks. It trades about 0.21 of its potential returns per unit of risk. The Brinks is currently generating about 0.14 per unit of risk. If you would invest 2,510 in Aedas Homes SA on October 31, 2024 and sell it today you would earn a total of 270.00 from holding Aedas Homes SA or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. The Brinks
Performance |
| Timeline |
| Aedas Homes SA |
| Brinks |
Aedas Homes and Brinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Brinks
The main advantage of trading using opposite Aedas Homes and Brinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Brinks 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 Brinks will offset losses from the drop in Brinks' long position.| Aedas Homes vs. Singapore Telecommunications Limited | Aedas Homes vs. CITIC Telecom International | Aedas Homes vs. CLEAN ENERGY FUELS | Aedas Homes vs. Universal Entertainment |
| Brinks vs. Eagle Materials | Brinks vs. BII Railway Transportation | Brinks vs. Mitsubishi Materials | Brinks vs. NAGOYA RAILROAD |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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