Correlation Between Atom Hoteles and Aedas Homes

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

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

Diversification Opportunities for Atom Hoteles and Aedas Homes

0.6

Correlation Coefficient

Atom Hoteles  Aedas Homes

Poor diversification

The 3 months correlation between Atom and Aedas is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Atom Hoteles Socimi 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 Atom Hoteles 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 Atom Hoteles Socimi 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 Atom Hoteles i.e., Atom Hoteles and Aedas Homes go up and down completely randomly.

Pair Corralation between Atom Hoteles and Aedas Homes

Assuming the 90 days trading horizon Atom Hoteles Socimi is expected to generate 0.66 times more return on investment than Aedas Homes. However, Atom Hoteles Socimi is 1.51 times less risky than Aedas Homes. It trades about 0.21 of its potential returns per unit of risk. Aedas Homes SL is currently generating about 0.05 per unit of risk. If you would invest  1,210  in Atom Hoteles Socimi on December 30, 2024 and sell it today you would earn a total of  210.00  from holding Atom Hoteles Socimi or generate 17.36% return on investment over 90 days.

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

Atom Hoteles Socimi  vs.  Aedas Homes SL

Atom Hoteles Socimi

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atom Hoteles Socimi are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Atom Hoteles exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aedas Homes SL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Aedas Homes is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Atom Hoteles and Aedas Homes

The main advantage of trading using opposite Atom Hoteles and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atom Hoteles 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 Atom Hoteles Socimi 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.