Correlation Between DFS Furniture and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Aedas 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 DFS Furniture and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Aedas Homes SA, you can compare the effects of market volatilities on DFS Furniture and Aedas 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 DFS Furniture with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Aedas Homes.
Diversification Opportunities for DFS Furniture and Aedas Homes
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between DFS and Aedas is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of DFS Furniture i.e., DFS Furniture and Aedas Homes go up and down completely randomly.
Pair Corralation between DFS Furniture and Aedas Homes
Assuming the 90 days trading horizon DFS Furniture PLC is expected to under-perform the Aedas Homes. In addition to that, DFS Furniture is 1.08 times more volatile than Aedas Homes SA. It trades about -0.13 of its total potential returns per unit of risk. Aedas Homes SA is currently generating about 0.3 per unit of volatility. If you would invest 2,580 in Aedas Homes SA on November 6, 2024 and sell it today you would earn a total of 345.00 from holding Aedas Homes SA or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Aedas Homes SA
Performance |
| Timeline |
| DFS Furniture PLC |
| Aedas Homes SA |
DFS Furniture and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Aedas Homes
The main advantage of trading using opposite DFS Furniture and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Aedas 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| DFS Furniture vs. KENEDIX OFFICE INV | DFS Furniture vs. Cal Maine Foods | DFS Furniture vs. Moneysupermarket Group PLC | DFS Furniture vs. CAL MAINE FOODS |
| Aedas Homes vs. Daito Trust Construction | Aedas Homes vs. Titan Machinery | Aedas Homes vs. FIRST SHIP LEASE | Aedas Homes vs. WIMFARM SA EO |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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