Correlation Between Aedas Homes and Atresmedia Corporacin

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

By analyzing existing cross correlation between Aedas Homes SL and Atresmedia Corporacin de, you can compare the effects of market volatilities on Aedas Homes and Atresmedia Corporacin 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 Atresmedia Corporacin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Atresmedia Corporacin.

Diversification Opportunities for Aedas Homes and Atresmedia Corporacin

0.25

Correlation Coefficient

Aedas Homes  Atresmedia Corporacin

Modest diversification

The 3 months correlation between Aedas and Atresmedia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SL and Atresmedia Corporacin de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atresmedia Corporacin 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 SL are associated (or correlated) with Atresmedia Corporacin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atresmedia Corporacin has no effect on the direction of Aedas Homes i.e., Aedas Homes and Atresmedia Corporacin go up and down completely randomly.

Pair Corralation between Aedas Homes and Atresmedia Corporacin

Assuming the 90 days trading horizon Aedas Homes SL is expected to generate 1.46 times more return on investment than Atresmedia Corporacin. However, Aedas Homes is 1.46 times more volatile than Atresmedia Corporacin de. It trades about 0.13 of its potential returns per unit of risk. Atresmedia Corporacin de is currently generating about 0.13 per unit of risk. If you would invest  2,427  in Aedas Homes SL on November 28, 2024 and sell it today you would earn a total of  313.00  from holding Aedas Homes SL or generate 12.9% 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 SL  vs.  Atresmedia Corporacin de

Aedas Homes SL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Aedas Homes displayed solid returns over the last few months and may actually be approaching a breakup point.

Atresmedia Corporacin

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atresmedia Corporacin de are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Atresmedia Corporacin may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Aedas Homes and Atresmedia Corporacin

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

The idea behind Aedas Homes SL and Atresmedia Corporacin de 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.