Correlation Between Atrys Health and Aedas Homes

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

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

Diversification Opportunities for Atrys Health and Aedas Homes

0.54

Correlation Coefficient

Atrys Health  Aedas Homes

Very weak diversification

The 3 months correlation between Atrys and Aedas is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Atrys Health SL and Aedas Homes SL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SL and Atrys Health 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 Atrys Health SL 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 SL has no effect on the direction of Atrys Health i.e., Atrys Health and Aedas Homes go up and down completely randomly.

Pair Corralation between Atrys Health and Aedas Homes

Assuming the 90 days trading horizon Atrys Health SL is expected to generate 1.14 times more return on investment than Aedas Homes. However, Atrys Health is 1.14 times more volatile than Aedas Homes SL. It trades about 0.12 of its potential returns per unit of risk. Aedas Homes SL is currently generating about 0.08 per unit of risk. If you would invest  321.00  in Atrys Health SL on October 27, 2024 and sell it today you would earn a total of  43.00  from holding Atrys Health SL or generate 13.4% return on investment over 90 days.

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

Atrys Health SL  vs.  Aedas Homes SL

Atrys Health SL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atrys Health SL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Atrys Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aedas Homes SL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Aedas Homes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Atrys Health and Aedas Homes

The main advantage of trading using opposite Atrys Health and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atrys Health 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 Atrys Health SL and Aedas Homes SL 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.