Correlation Between Aedas Homes and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT, you can compare the effects of market volatilities on Aedas Homes and CDL INVESTMENT 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 CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and CDL INVESTMENT.
Diversification Opportunities for Aedas Homes and CDL INVESTMENT
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aedas and CDL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of Aedas Homes i.e., Aedas Homes and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between Aedas Homes and CDL INVESTMENT
Assuming the 90 days horizon Aedas Homes SA is expected to generate 1.08 times more return on investment than CDL INVESTMENT. However, Aedas Homes is 1.08 times more volatile than CDL INVESTMENT. It trades about 0.06 of its potential returns per unit of risk. CDL INVESTMENT is currently generating about -0.03 per unit of risk. If you would invest 2,500 in Aedas Homes SA on December 26, 2024 and sell it today you would earn a total of 165.00 from holding Aedas Homes SA or generate 6.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aedas Homes SA vs. CDL INVESTMENT
Performance |
Timeline |
Aedas Homes SA |
CDL INVESTMENT |
Aedas Homes and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aedas Homes and CDL INVESTMENT
The main advantage of trading using opposite Aedas Homes and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.Aedas Homes vs. CARSALESCOM | Aedas Homes vs. MARKET VECTR RETAIL | Aedas Homes vs. AIR PRODCHEMICALS | Aedas Homes vs. GOME Retail Holdings |
CDL INVESTMENT vs. PennyMac Mortgage Investment | CDL INVESTMENT vs. SLR Investment Corp | CDL INVESTMENT vs. MEDCAW INVESTMENTS LS 01 | CDL INVESTMENT vs. Grand Canyon Education |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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