Correlation Between Aeorema Communications and Hammerson PLC
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Hammerson PLC 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 Hammerson PLC 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 Hammerson PLC, you can compare the effects of market volatilities on Aeorema Communications and Hammerson PLC 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 Hammerson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Hammerson PLC.
Diversification Opportunities for Aeorema Communications and Hammerson PLC
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aeorema and Hammerson is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Hammerson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammerson PLC 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 Hammerson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammerson PLC has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Hammerson PLC go up and down completely randomly.
Pair Corralation between Aeorema Communications and Hammerson PLC
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Hammerson PLC. In addition to that, Aeorema Communications is 1.34 times more volatile than Hammerson PLC. It trades about -0.04 of its total potential returns per unit of risk. Hammerson PLC is currently generating about 0.04 per unit of volatility. If you would invest 24,606 in Hammerson PLC on August 25, 2024 and sell it today you would earn a total of 4,234 from holding Hammerson PLC or generate 17.21% 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. Hammerson PLC
Performance |
| Timeline |
| Aeorema Communications |
| Hammerson PLC |
Aeorema Communications and Hammerson PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Hammerson PLC
The main advantage of trading using opposite Aeorema Communications and Hammerson PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Hammerson PLC 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 Hammerson PLC will offset losses from the drop in Hammerson PLC's 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 |
| Hammerson PLC vs. Neometals | Hammerson PLC vs. Coor Service Management | Hammerson PLC vs. Fidelity Sustainable USD | Hammerson PLC vs. Sancus Lending Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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