Correlation Between Aedas Homes and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Sekisui Chemical 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 Sekisui Chemical 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 Sekisui Chemical Co, you can compare the effects of market volatilities on Aedas Homes and Sekisui Chemical 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 Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Sekisui Chemical.
Diversification Opportunities for Aedas Homes and Sekisui Chemical
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aedas and Sekisui is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical 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 Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of Aedas Homes i.e., Aedas Homes and Sekisui Chemical go up and down completely randomly.
Pair Corralation between Aedas Homes and Sekisui Chemical
Assuming the 90 days horizon Aedas Homes SA is expected to generate 1.06 times more return on investment than Sekisui Chemical. However, Aedas Homes is 1.06 times more volatile than Sekisui Chemical Co. It trades about 0.11 of its potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.03 per unit of risk. If you would invest 948.00 in Aedas Homes SA on September 3, 2024 and sell it today you would earn a total of 1,502 from holding Aedas Homes SA or generate 158.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. Sekisui Chemical Co
Performance |
| Timeline |
| Aedas Homes SA |
| Sekisui Chemical |
Aedas Homes and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Sekisui Chemical
The main advantage of trading using opposite Aedas Homes and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Sekisui Chemical 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 Sekisui Chemical will offset losses from the drop in Sekisui Chemical'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 |
| Sekisui Chemical vs. Strategic Investments AS | Sekisui Chemical vs. Japan Asia Investment | Sekisui Chemical vs. Virtus Investment Partners | Sekisui Chemical vs. United Internet 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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