Correlation Between Aedas Homes and KENEDIX OFFICE

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

Diversification Opportunities for Aedas Homes and KENEDIX OFFICE

0.58

Correlation Coefficient

Aedas Homes  KENEDIX OFFICE

Very weak diversification

The 3 months correlation between Aedas and KENEDIX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and KENEDIX OFFICE INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENEDIX OFFICE INV 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 KENEDIX OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENEDIX OFFICE INV has no effect on the direction of Aedas Homes i.e., Aedas Homes and KENEDIX OFFICE go up and down completely randomly.

Pair Corralation between Aedas Homes and KENEDIX OFFICE

Assuming the 90 days horizon Aedas Homes SA is expected to generate 1.11 times more return on investment than KENEDIX OFFICE. However, Aedas Homes is 1.11 times more volatile than KENEDIX OFFICE INV. It trades about 0.14 of its potential returns per unit of risk. KENEDIX OFFICE INV is currently generating about 0.03 per unit of risk. If you would invest  2,425  in Aedas Homes SA on December 21, 2024 and sell it today you would earn a total of  435.00  from holding Aedas Homes SA or generate 17.94% 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.  KENEDIX OFFICE INV

Aedas Homes SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SA are ranked lower than 11 (%) 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.

KENEDIX OFFICE INV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KENEDIX OFFICE INV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KENEDIX OFFICE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aedas Homes and KENEDIX OFFICE

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

The idea behind Aedas Homes SA and KENEDIX OFFICE INV 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.