Correlation Between Quality Houses and AIM Commercial

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

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

Diversification Opportunities for Quality Houses and AIM Commercial

0.93

Correlation Coefficient

Quality Houses  AIM Commercial

Almost no diversification

The 3 months correlation between Quality and AIM is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Quality Houses Property and AIM Commercial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Commercial Growth and Quality Houses 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 Quality Houses Property are associated (or correlated) with AIM Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Commercial Growth has no effect on the direction of Quality Houses i.e., Quality Houses and AIM Commercial go up and down completely randomly.

Pair Corralation between Quality Houses and AIM Commercial

Assuming the 90 days trading horizon Quality Houses Property is expected to generate 0.54 times more return on investment than AIM Commercial. However, Quality Houses Property is 1.87 times less risky than AIM Commercial. It trades about -0.26 of its potential returns per unit of risk. AIM Commercial Growth is currently generating about -0.19 per unit of risk. If you would invest  472.00  in Quality Houses Property on December 27, 2024 and sell it today you would lose (94.00) from holding Quality Houses Property or give up 19.92% of portfolio value over 90 days.

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

Quality Houses Property  vs.  AIM Commercial Growth

Quality Houses Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quality Houses Property has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the fund institutional investors.

AIM Commercial Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days AIM Commercial Growth 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Quality Houses and AIM Commercial

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

The idea behind Quality Houses Property and AIM Commercial Growth 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.