Correlation Between Aedas Homes and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and CHINA EDUCATION 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 Aedas Homes and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SA and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Aedas Homes and CHINA EDUCATION 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 Aedas Homes with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and CHINA EDUCATION.
Diversification Opportunities for Aedas Homes and CHINA EDUCATION
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aedas and CHINA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and Aedas Homes 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 Aedas Homes SA are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Aedas Homes i.e., Aedas Homes and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Aedas Homes and CHINA EDUCATION
Assuming the 90 days horizon Aedas Homes is expected to generate 2.0 times less return on investment than CHINA EDUCATION. But when comparing it to its historical volatility, Aedas Homes SA is 1.12 times less risky than CHINA EDUCATION. It trades about 0.05 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 26.00 in CHINA EDUCATION GROUP on April 25, 2025 and sell it today you would earn a total of 5.00 from holding CHINA EDUCATION GROUP or generate 19.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aedas Homes SA vs. CHINA EDUCATION GROUP
Performance |
Timeline |
Aedas Homes SA |
CHINA EDUCATION GROUP |
Aedas Homes and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aedas Homes and CHINA EDUCATION
The main advantage of trading using opposite Aedas Homes and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.Aedas Homes vs. Live Nation Entertainment | Aedas Homes vs. Tencent Music Entertainment | Aedas Homes vs. Caseys General Stores | Aedas Homes vs. BURLINGTON STORES |
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Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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