Correlation Between Aedas Homes and Lingotes
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Lingotes 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 Lingotes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SL and Lingotes, you can compare the effects of market volatilities on Aedas Homes and Lingotes 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 Lingotes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Lingotes.
Diversification Opportunities for Aedas Homes and Lingotes
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aedas and Lingotes is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SL and Lingotes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingotes 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 SL are associated (or correlated) with Lingotes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lingotes has no effect on the direction of Aedas Homes i.e., Aedas Homes and Lingotes go up and down completely randomly.
Pair Corralation between Aedas Homes and Lingotes
Assuming the 90 days trading horizon Aedas Homes SL is expected to generate 0.68 times more return on investment than Lingotes. However, Aedas Homes SL is 1.47 times less risky than Lingotes. It trades about 0.11 of its potential returns per unit of risk. Lingotes is currently generating about 0.03 per unit of risk. If you would invest 1,100 in Aedas Homes SL on September 12, 2024 and sell it today you would earn a total of 1,475 from holding Aedas Homes SL or generate 134.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.83% |
| Values | Daily Returns |
Aedas Homes SL vs. Lingotes
Performance |
| Timeline |
| Aedas Homes SL |
| Lingotes |
Aedas Homes and Lingotes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Lingotes
The main advantage of trading using opposite Aedas Homes and Lingotes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Lingotes 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 Lingotes will offset losses from the drop in Lingotes' long position.| Aedas Homes vs. Neinor Homes SLU | Aedas Homes vs. Metrovacesa SA | Aedas Homes vs. Merlin Properties SOCIMI | Aedas Homes vs. Atresmedia Corporacin de |
| Lingotes vs. International Consolidated Airlines | Lingotes vs. Aena SA | Lingotes vs. Acerinox | Lingotes vs. ACS Actividades de |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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