Correlation Between Aedas Homes and Live Nation

Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Live Nation 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 Aedas Homes and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aedas Homes SA and Live Nation Entertainment, you can compare the effects of market volatilities on Aedas Homes and Live Nation 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 Aedas Homes with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Live Nation.

Diversification Opportunities for Aedas Homes and Live Nation

0.7

Correlation Coefficient

Aedas Homes  Live Nation

Poor diversification

The 3 months correlation between Aedas and Live is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and Aedas Homes 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 Aedas Homes SA are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of Aedas Homes i.e., Aedas Homes and Live Nation go up and down completely randomly.

Pair Corralation between Aedas Homes and Live Nation

Assuming the 90 days horizon Aedas Homes SA is expected to generate 0.97 times more return on investment than Live Nation. However, Aedas Homes SA is 1.03 times less risky than Live Nation. It trades about 0.13 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.09 per unit of risk. If you would invest  927.00  in Aedas Homes SA on December 6, 2024 and sell it today you would earn a total of  1,853  from holding Aedas Homes SA or generate 199.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aedas Homes SA  vs.  Live Nation Entertainment

Aedas Homes SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Aedas Homes reported solid returns over the last few months and may actually be approaching a breakup point.

Live Nation Entertainment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Live Nation may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aedas Homes and Live Nation

The main advantage of trading using opposite Aedas Homes and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.

The idea behind Aedas Homes SA and Live Nation Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.