Correlation Between Aeorema Communications and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Martin Marietta 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 Martin Marietta 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 Martin Marietta Materials, you can compare the effects of market volatilities on Aeorema Communications and Martin Marietta 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 Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Martin Marietta.
Diversification Opportunities for Aeorema Communications and Martin Marietta
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aeorema and Martin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials 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 Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Martin Marietta go up and down completely randomly.
Pair Corralation between Aeorema Communications and Martin Marietta
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to generate 0.84 times more return on investment than Martin Marietta. However, Aeorema Communications Plc is 1.19 times less risky than Martin Marietta. It trades about 0.26 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.05 per unit of risk. If you would invest 5,000 in Aeorema Communications Plc on August 31, 2024 and sell it today you would earn a total of 450.00 from holding Aeorema Communications Plc or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Martin Marietta Materials
Performance |
| Timeline |
| Aeorema Communications |
| Martin Marietta Materials |
Aeorema Communications and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Martin Marietta
The main advantage of trading using opposite Aeorema Communications and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.| Aeorema Communications vs. Ironveld Plc | Aeorema Communications vs. Impax Environmental Markets | Aeorema Communications vs. Hochschild Mining plc | Aeorema Communications vs. Endeavour Mining Corp |
| Martin Marietta vs. Neometals | Martin Marietta vs. Coor Service Management | Martin Marietta vs. Aeorema Communications Plc | Martin Marietta vs. JLEN Environmental Assets |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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