Correlation Between Care Property and Aedifica

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

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

Diversification Opportunities for Care Property and Aedifica

0.86

Correlation Coefficient

Care Property  Aedifica

Very poor diversification

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

Pair Corralation between Care Property and Aedifica

Assuming the 90 days trading horizon Care Property is expected to generate 1.12 times less return on investment than Aedifica. But when comparing it to its historical volatility, Care Property Invest is 1.01 times less risky than Aedifica. It trades about 0.01 of its potential returns per unit of risk. Aedifica is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,815  in Aedifica on August 31, 2024 and sell it today you would lose (10.00) from holding Aedifica or give up 0.17% of portfolio value over 90 days.

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

Care Property Invest  vs.  Aedifica

Care Property Invest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Care Property Invest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Aedifica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aedifica has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Aedifica is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Care Property and Aedifica

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

The idea behind Care Property Invest and Aedifica 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.