Correlation Between Aedas Homes and 24SEVENOFFICE GROUP

Can any of the company-specific risk be diversified away by investing in both Aedas Homes and 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP AB, you can compare the effects of market volatilities on Aedas Homes and 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and 24SEVENOFFICE GROUP.

Diversification Opportunities for Aedas Homes and 24SEVENOFFICE GROUP

0.55

Correlation Coefficient

Aedas Homes  24SEVENOFFICE GROUP

Very weak diversification

The 3 months correlation between Aedas and 24SEVENOFFICE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and 24SEVENOFFICE GROUP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 24SEVENOFFICE GROUP has no effect on the direction of Aedas Homes i.e., Aedas Homes and 24SEVENOFFICE GROUP go up and down completely randomly.

Pair Corralation between Aedas Homes and 24SEVENOFFICE GROUP

Assuming the 90 days horizon Aedas Homes SA is expected to under-perform the 24SEVENOFFICE GROUP. But the stock apears to be less risky and, when comparing its historical volatility, Aedas Homes SA is 2.16 times less risky than 24SEVENOFFICE GROUP. The stock trades about 0.0 of its potential returns per unit of risk. The 24SEVENOFFICE GROUP AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  170.00  in 24SEVENOFFICE GROUP AB on September 5, 2024 and sell it today you would earn a total of  30.00  from holding 24SEVENOFFICE GROUP AB or generate 17.65% return on investment over 90 days.

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

Aedas Homes SA  vs.  24SEVENOFFICE GROUP AB

Aedas Homes SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aedas Homes SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aedas Homes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

24SEVENOFFICE GROUP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 24SEVENOFFICE GROUP AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, 24SEVENOFFICE GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aedas Homes and 24SEVENOFFICE GROUP

The main advantage of trading using opposite Aedas Homes and 24SEVENOFFICE GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP will offset losses from the drop in 24SEVENOFFICE GROUP's long position.

The idea behind Aedas Homes SA and 24SEVENOFFICE GROUP AB 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.