Correlation Between CENTURIA OFFICE and Aedas Homes

Can any of the company-specific risk be diversified away by investing in both CENTURIA OFFICE and Aedas Homes 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 CENTURIA OFFICE and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CENTURIA OFFICE REIT and Aedas Homes SA, you can compare the effects of market volatilities on CENTURIA OFFICE and Aedas Homes 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 CENTURIA OFFICE with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and Aedas Homes.

Diversification Opportunities for CENTURIA OFFICE and Aedas Homes

0.19

Correlation Coefficient

CENTURIA OFFICE  Aedas Homes

Average diversification

The 3 months correlation between CENTURIA and Aedas is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA and CENTURIA OFFICE 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 CENTURIA OFFICE REIT are associated (or correlated) with Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and Aedas Homes go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and Aedas Homes

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to generate 0.95 times more return on investment than Aedas Homes. However, CENTURIA OFFICE REIT is 1.06 times less risky than Aedas Homes. It trades about 0.09 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.06 per unit of risk. If you would invest  58.00  in CENTURIA OFFICE REIT on December 30, 2024 and sell it today you would earn a total of  6.00  from holding CENTURIA OFFICE REIT or generate 10.34% return on investment over 90 days.

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

CENTURIA OFFICE REIT  vs.  Aedas Homes SA

CENTURIA OFFICE REIT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CENTURIA OFFICE REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CENTURIA OFFICE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aedas Homes SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aedas Homes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CENTURIA OFFICE and Aedas Homes

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

The idea behind CENTURIA OFFICE REIT and Aedas Homes SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.