Correlation Between Aedas Homes and Elaia Investment

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

Diversification Opportunities for Aedas Homes and Elaia Investment

0.07

Correlation Coefficient

Aedas Homes  Elaia Investment

Significant diversification

The 3 months correlation between Aedas and Elaia is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SL and Elaia Investment Spain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elaia Investment Spain 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 Elaia Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elaia Investment Spain has no effect on the direction of Aedas Homes i.e., Aedas Homes and Elaia Investment go up and down completely randomly.

Pair Corralation between Aedas Homes and Elaia Investment

Assuming the 90 days trading horizon Aedas Homes SL is expected to generate 0.58 times more return on investment than Elaia Investment. However, Aedas Homes SL is 1.72 times less risky than Elaia Investment. It trades about 0.01 of its potential returns per unit of risk. Elaia Investment Spain is currently generating about -0.12 per unit of risk. If you would invest  2,480  in Aedas Homes SL on September 5, 2024 and sell it today you would earn a total of  15.00  from holding Aedas Homes SL or generate 0.6% return on investment over 90 days.

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

Aedas Homes SL  vs.  Elaia Investment Spain

Aedas Homes SL

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Aedas Homes is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Elaia Investment Spain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elaia Investment Spain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aedas Homes and Elaia Investment

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

The idea behind Aedas Homes SL and Elaia Investment Spain 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.