Correlation Between Aena SME and UDR

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

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

Diversification Opportunities for Aena SME and UDR

0.69

Correlation Coefficient

Aena SME  UDR

Poor diversification

The 3 months correlation between Aena and UDR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aena SME SA and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc and Aena SME 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 SME SA are associated (or correlated) with UDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UDR Inc has no effect on the direction of Aena SME i.e., Aena SME and UDR go up and down completely randomly.

Pair Corralation between Aena SME and UDR

Assuming the 90 days horizon Aena SME SA is expected to generate 1.32 times more return on investment than UDR. However, Aena SME is 1.32 times more volatile than UDR Inc. It trades about 0.13 of its potential returns per unit of risk. UDR Inc is currently generating about 0.05 per unit of risk. If you would invest  2,081  in Aena SME SA on December 27, 2024 and sell it today you would earn a total of  275.00  from holding Aena SME SA or generate 13.21% return on investment over 90 days.

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

Aena SME SA  vs.  UDR Inc

Aena SME SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aena SME showed solid returns over the last few months and may actually be approaching a breakup point.

UDR Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UDR Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, UDR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aena SME and UDR

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

The idea behind Aena SME SA and UDR Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.