Correlation Between INSURANCE AUST and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST 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 INSURANCE AUST and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and Aedas Homes SA, you can compare the effects of market volatilities on INSURANCE AUST 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 INSURANCE AUST with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Aedas Homes.
Diversification Opportunities for INSURANCE AUST and Aedas Homes
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INSURANCE and Aedas is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP 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 INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Aedas Homes go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Aedas Homes
Assuming the 90 days trading horizon INSURANCE AUST is expected to generate 3.19 times less return on investment than Aedas Homes. But when comparing it to its historical volatility, INSURANCE AUST GRP is 1.21 times less risky than Aedas Homes. It trades about 0.09 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,401 in Aedas Homes SA on October 12, 2024 and sell it today you would earn a total of 199.00 from holding Aedas Homes SA or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Aedas Homes SA
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Aedas Homes SA |
INSURANCE AUST and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Aedas Homes
The main advantage of trading using opposite INSURANCE AUST and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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.| INSURANCE AUST vs. FLOW TRADERS LTD | INSURANCE AUST vs. ADRIATIC METALS LS 013355 | INSURANCE AUST vs. TRADELINK ELECTRON | INSURANCE AUST vs. Jacquet Metal Service |
| Aedas Homes vs. INSURANCE AUST GRP | Aedas Homes vs. Vienna Insurance Group | Aedas Homes vs. Safety Insurance Group | Aedas Homes vs. International Consolidated Airlines |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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