Correlation Between Aedas Homes and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Aedas Homes and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and SMA Solar.
Diversification Opportunities for Aedas Homes and SMA Solar
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aedas and SMA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Aedas Homes i.e., Aedas Homes and SMA Solar go up and down completely randomly.
Pair Corralation between Aedas Homes and SMA Solar
Assuming the 90 days horizon Aedas Homes SA is expected to generate 0.37 times more return on investment than SMA Solar. However, Aedas Homes SA is 2.72 times less risky than SMA Solar. It trades about -0.11 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.09 per unit of risk. If you would invest 2,575 in Aedas Homes SA on September 3, 2024 and sell it today you would lose (125.00) from holding Aedas Homes SA or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. SMA Solar Technology
Performance |
| Timeline |
| Aedas Homes SA |
| SMA Solar Technology |
Aedas Homes and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and SMA Solar
The main advantage of trading using opposite Aedas Homes and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Aedas Homes vs. Sekisui Chemical Co | Aedas Homes vs. BARRATT DEVEL UNSPADR2 | Aedas Homes vs. Superior Plus Corp | Aedas Homes vs. NMI Holdings |
| SMA Solar vs. Superior Plus Corp | SMA Solar vs. NMI Holdings | SMA Solar vs. Origin Agritech | SMA Solar vs. SIVERS SEMICONDUCTORS AB |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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