Correlation Between Vonovia SE and Aztec Land

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

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

Diversification Opportunities for Vonovia SE and Aztec Land

-0.53

Correlation Coefficient

Vonovia SE  Aztec Land

Excellent diversification

The 3 months correlation between Vonovia and Aztec is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vonovia SE and Aztec Land Comb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aztec Land Comb and Vonovia SE 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 Vonovia SE are associated (or correlated) with Aztec Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aztec Land Comb has no effect on the direction of Vonovia SE i.e., Vonovia SE and Aztec Land go up and down completely randomly.

Pair Corralation between Vonovia SE and Aztec Land

Assuming the 90 days horizon Vonovia SE is expected to under-perform the Aztec Land. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vonovia SE is 1.29 times less risky than Aztec Land. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Aztec Land Comb is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  83,000  in Aztec Land Comb on December 29, 2024 and sell it today you would earn a total of  34,500  from holding Aztec Land Comb or generate 41.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Vonovia SE  vs.  Aztec Land Comb

Vonovia SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vonovia SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aztec Land Comb

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aztec Land Comb are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Aztec Land showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vonovia SE and Aztec Land

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

The idea behind Vonovia SE and Aztec Land Comb 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.