Correlation Between Aena SA and Adriano Care

Can any of the company-specific risk be diversified away by investing in both Aena SA and Adriano Care 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 Aena SA and Adriano Care into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aena SA and Adriano Care SOCIMI, you can compare the effects of market volatilities on Aena SA and Adriano Care 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 Aena SA with a short position of Adriano Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SA and Adriano Care.

Diversification Opportunities for Aena SA and Adriano Care

0.86

Correlation Coefficient

Aena SA  Adriano Care

Very poor diversification

The 3 months correlation between Aena and Adriano is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Aena SA and Adriano Care SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriano Care SOCIMI and Aena SA 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 Aena SA are associated (or correlated) with Adriano Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriano Care SOCIMI has no effect on the direction of Aena SA i.e., Aena SA and Adriano Care go up and down completely randomly.

Pair Corralation between Aena SA and Adriano Care

Assuming the 90 days trading horizon Aena SA is expected to generate 8.72 times more return on investment than Adriano Care. However, Aena SA is 8.72 times more volatile than Adriano Care SOCIMI. It trades about 0.15 of its potential returns per unit of risk. Adriano Care SOCIMI is currently generating about 0.12 per unit of risk. If you would invest  19,910  in Aena SA on December 30, 2024 and sell it today you would earn a total of  2,070  from holding Aena SA or generate 10.4% return on investment over 90 days.

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

Aena SA  vs.  Adriano Care SOCIMI

Aena SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Aena SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Adriano Care SOCIMI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adriano Care SOCIMI are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Adriano Care is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aena SA and Adriano Care

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

The idea behind Aena SA and Adriano Care SOCIMI 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..