Correlation Between Aedas Homes and HomeToGo

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

Diversification Opportunities for Aedas Homes and HomeToGo

-0.08

Correlation Coefficient

Aedas Homes  HomeToGo

Good diversification

The 3 months correlation between Aedas and HomeToGo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE 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 HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Aedas Homes i.e., Aedas Homes and HomeToGo go up and down completely randomly.

Pair Corralation between Aedas Homes and HomeToGo

Assuming the 90 days horizon Aedas Homes SA is expected to generate 0.59 times more return on investment than HomeToGo. However, Aedas Homes SA is 1.69 times less risky than HomeToGo. It trades about 0.13 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.07 per unit of risk. If you would invest  2,363  in Aedas Homes SA on November 29, 2024 and sell it today you would earn a total of  347.00  from holding Aedas Homes SA or generate 14.68% return on investment over 90 days.

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

Aedas Homes SA  vs.  HomeToGo SE

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 fragile basic indicators, Aedas Homes reported solid returns over the last few months and may actually be approaching a breakup point.

HomeToGo SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days HomeToGo SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aedas Homes and HomeToGo

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

The idea behind Aedas Homes SA and HomeToGo SE 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.