Correlation Between Aedas Homes and 3D Systems

Can any of the company-specific risk be diversified away by investing in both Aedas Homes and 3D Systems 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 3D Systems 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 3D Systems, you can compare the effects of market volatilities on Aedas Homes and 3D Systems 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 3D Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and 3D Systems.

Diversification Opportunities for Aedas Homes and 3D Systems

0.23

Correlation Coefficient

Aedas Homes  3D Systems

Modest diversification

The 3 months correlation between Aedas and SYV is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and 3D Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3D Systems 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 3D Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3D Systems has no effect on the direction of Aedas Homes i.e., Aedas Homes and 3D Systems go up and down completely randomly.

Pair Corralation between Aedas Homes and 3D Systems

Assuming the 90 days horizon Aedas Homes SA is expected to generate 0.3 times more return on investment than 3D Systems. However, Aedas Homes SA is 3.38 times less risky than 3D Systems. It trades about 0.16 of its potential returns per unit of risk. 3D Systems is currently generating about -0.05 per unit of risk. If you would invest  2,375  in Aedas Homes SA on December 20, 2024 and sell it today you would earn a total of  475.00  from holding Aedas Homes SA or generate 20.0% return on investment over 90 days.

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

Aedas Homes SA  vs.  3D Systems

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 12 (%) 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.

3D Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days 3D Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aedas Homes and 3D Systems

The main advantage of trading using opposite Aedas Homes and 3D Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, 3D Systems 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 3D Systems will offset losses from the drop in 3D Systems' long position.

The idea behind Aedas Homes SA and 3D Systems 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.