Correlation Between Agile Content and Aedas Homes

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

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

Diversification Opportunities for Agile Content and Aedas Homes

0.32

Correlation Coefficient

Agile Content  Aedas Homes

Weak diversification

The 3 months correlation between Agile and Aedas is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Agile Content SA 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 Agile Content 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 Agile Content SA 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 Agile Content i.e., Agile Content and Aedas Homes go up and down completely randomly.

Pair Corralation between Agile Content and Aedas Homes

Assuming the 90 days trading horizon Agile Content SA is expected to under-perform the Aedas Homes. In addition to that, Agile Content is 1.46 times more volatile than Aedas Homes SL. It trades about -0.06 of its total potential returns per unit of risk. Aedas Homes SL is currently generating about 0.01 per unit of volatility. If you would invest  2,470  in Aedas Homes SL on September 4, 2024 and sell it today you would earn a total of  5.00  from holding Aedas Homes SL or generate 0.2% return on investment over 90 days.

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

Agile Content SA  vs.  Aedas Homes SL

Agile Content SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agile Content SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aedas Homes SL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aedas Homes SL has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Agile Content and Aedas Homes

The main advantage of trading using opposite Agile Content and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agile Content 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 Agile Content SA 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 CEOs Directory module to screen CEOs from public companies around the world.