Correlation Between Holmes Place and Aerodrome
Can any of the company-specific risk be diversified away by investing in both Holmes Place and Aerodrome 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 Holmes Place and Aerodrome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmes Place International and Aerodrome Group, you can compare the effects of market volatilities on Holmes Place and Aerodrome 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 Holmes Place with a short position of Aerodrome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmes Place and Aerodrome.
Diversification Opportunities for Holmes Place and Aerodrome
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Holmes and Aerodrome is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Holmes Place International and Aerodrome Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerodrome Group and Holmes Place 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 Holmes Place International are associated (or correlated) with Aerodrome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerodrome Group has no effect on the direction of Holmes Place i.e., Holmes Place and Aerodrome go up and down completely randomly.
Pair Corralation between Holmes Place and Aerodrome
Assuming the 90 days trading horizon Holmes Place International is expected to generate 0.4 times more return on investment than Aerodrome. However, Holmes Place International is 2.48 times less risky than Aerodrome. It trades about 0.15 of its potential returns per unit of risk. Aerodrome Group is currently generating about -0.15 per unit of risk. If you would invest 52,410 in Holmes Place International on September 1, 2024 and sell it today you would earn a total of 3,560 from holding Holmes Place International or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmes Place International vs. Aerodrome Group
Performance |
| Timeline |
| Holmes Place Interna |
| Aerodrome Group |
Holmes Place and Aerodrome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmes Place and Aerodrome
The main advantage of trading using opposite Holmes Place and Aerodrome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmes Place position performs unexpectedly, Aerodrome 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 Aerodrome will offset losses from the drop in Aerodrome's long position.| Holmes Place vs. Fattal 1998 Holdings | Holmes Place vs. Delek Group | Holmes Place vs. Bank Leumi Le Israel | Holmes Place vs. Matrix |
| Aerodrome vs. Millennium Food Tech LP | Aerodrome vs. Retailors | Aerodrome vs. Inrom Construction Industries | Aerodrome vs. Homebiogas |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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