Correlation Between Aedas Homes and Apple

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

Diversification Opportunities for Aedas Homes and Apple

0.44

Correlation Coefficient

Aedas Homes  Apple

Very weak diversification

The 3 months correlation between Aedas and Apple is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Aedas Homes i.e., Aedas Homes and Apple go up and down completely randomly.

Pair Corralation between Aedas Homes and Apple

Assuming the 90 days horizon Aedas Homes is expected to generate 52.52 times less return on investment than Apple. In addition to that, Aedas Homes is 1.49 times more volatile than Apple Inc. It trades about 0.0 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.1 per unit of volatility. If you would invest  20,601  in Apple Inc on August 30, 2024 and sell it today you would earn a total of  1,714  from holding Apple Inc or generate 8.32% 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.  Apple Inc

Aedas Homes SA

Risk-Adjusted Performance

0 of 100

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.

Apple Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Aedas Homes and Apple

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

The idea behind Aedas Homes SA and Apple Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.