Correlation Between Aeorema Communications and Hansa Investment
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Hansa Investment 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 Hansa Investment 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 Hansa Investment, you can compare the effects of market volatilities on Aeorema Communications and Hansa Investment 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 Hansa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Hansa Investment.
Diversification Opportunities for Aeorema Communications and Hansa Investment
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aeorema and Hansa is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment 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 Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Hansa Investment go up and down completely randomly.
Pair Corralation between Aeorema Communications and Hansa Investment
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Hansa Investment. In addition to that, Aeorema Communications is 1.62 times more volatile than Hansa Investment. It trades about -0.01 of its total potential returns per unit of risk. Hansa Investment is currently generating about 0.04 per unit of volatility. If you would invest 17,594 in Hansa Investment on September 3, 2024 and sell it today you would earn a total of 4,306 from holding Hansa Investment or generate 24.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Hansa Investment
Performance |
| Timeline |
| Aeorema Communications |
| Hansa Investment |
Aeorema Communications and Hansa Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Hansa Investment
The main advantage of trading using opposite Aeorema Communications and Hansa Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Hansa Investment 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 Hansa Investment will offset losses from the drop in Hansa Investment's long position.| Aeorema Communications vs. Creo Medical Group | Aeorema Communications vs. Grieg Seafood | Aeorema Communications vs. Medical Properties Trust | Aeorema Communications vs. CompuGroup Medical AG |
| Hansa Investment vs. Hansa Biopharma AB | Hansa Investment vs. Hansa Trust | Hansa Investment vs. Eastman Chemical Co | Hansa Investment vs. American Tower REIT |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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