Correlation Between Aztec Land and Aroundtown

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

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

Diversification Opportunities for Aztec Land and Aroundtown

-0.6

Correlation Coefficient

Aztec Land  Aroundtown

Excellent diversification

The 3 months correlation between Aztec and Aroundtown is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aztec Land Comb and Aroundtown SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aroundtown SA and Aztec Land 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 Aztec Land Comb are associated (or correlated) with Aroundtown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aroundtown SA has no effect on the direction of Aztec Land i.e., Aztec Land and Aroundtown go up and down completely randomly.

Pair Corralation between Aztec Land and Aroundtown

Assuming the 90 days horizon Aztec Land Comb is expected to generate 1.1 times more return on investment than Aroundtown. However, Aztec Land is 1.1 times more volatile than Aroundtown SA. It trades about 0.16 of its potential returns per unit of risk. Aroundtown SA is currently generating about -0.01 per unit of risk. If you would invest  82,102  in Aztec Land Comb on December 1, 2024 and sell it today you would earn a total of  18,898  from holding Aztec Land Comb or generate 23.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	78.13%
Values	Daily Returns

Aztec Land Comb  vs.  Aroundtown SA

Aztec Land Comb

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aztec Land Comb are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Aztec Land showed solid returns over the last few months and may actually be approaching a breakup point.

Aroundtown SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aroundtown SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aroundtown is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aztec Land and Aroundtown

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

The idea behind Aztec Land Comb and Aroundtown SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..