Correlation Between Aeorema Communications and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Beazer 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 Aeorema Communications and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and Beazer Homes USA, you can compare the effects of market volatilities on Aeorema Communications and Beazer 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 Aeorema Communications with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Beazer Homes.
Diversification Opportunities for Aeorema Communications and Beazer Homes
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aeorema and Beazer is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Beazer Homes go up and down completely randomly.
Pair Corralation between Aeorema Communications and Beazer Homes
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Beazer Homes. But the stock apears to be less risky and, when comparing its historical volatility, Aeorema Communications Plc is 1.65 times less risky than Beazer Homes. The stock trades about -0.01 of its potential returns per unit of risk. The Beazer Homes USA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,364 in Beazer Homes USA on September 2, 2024 and sell it today you would earn a total of 2,141 from holding Beazer Homes USA or generate 156.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 57.31% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Beazer Homes USA
Performance |
| Timeline |
| Aeorema Communications |
| Beazer Homes USA |
Aeorema Communications and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Beazer Homes
The main advantage of trading using opposite Aeorema Communications and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Beazer 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 Beazer Homes will offset losses from the drop in Beazer Homes' long position.| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
| Beazer Homes vs. Medical Properties Trust | Beazer Homes vs. Lindsell Train Investment | Beazer Homes vs. HCA Healthcare | Beazer Homes vs. MyHealthChecked Plc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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