Correlation Between Global Ship and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Global Ship and Aedas Homes 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 Global Ship and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Aedas Homes SA, you can compare the effects of market volatilities on Global Ship and Aedas Homes 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 Global Ship with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Aedas Homes.
Diversification Opportunities for Global Ship and Aedas Homes
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Aedas is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA and Global Ship 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 Global Ship Lease are associated (or correlated) with Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Global Ship i.e., Global Ship and Aedas Homes go up and down completely randomly.
Pair Corralation between Global Ship and Aedas Homes
Assuming the 90 days horizon Global Ship Lease is expected to generate 1.01 times more return on investment than Aedas Homes. However, Global Ship is 1.01 times more volatile than Aedas Homes SA. It trades about 0.15 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.08 per unit of risk. If you would invest 2,034 in Global Ship Lease on October 21, 2024 and sell it today you would earn a total of 114.00 from holding Global Ship Lease or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Aedas Homes SA
Performance |
| Timeline |
| Global Ship Lease |
| Aedas Homes SA |
Global Ship and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Aedas Homes
The main advantage of trading using opposite Global Ship and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Global Ship vs. CEOTRONICS | Global Ship vs. SEI INVESTMENTS | Global Ship vs. Perdoceo Education | Global Ship vs. Coor Service Management |
| Aedas Homes vs. Kingdee International Software | Aedas Homes vs. USU Software AG | Aedas Homes vs. Thai Beverage Public | Aedas Homes vs. Constellation Software |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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