Correlation Between CITY OFFICE and Aedas Homes

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

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

Diversification Opportunities for CITY OFFICE and Aedas Homes

-0.09

Correlation Coefficient

CITY OFFICE  Aedas Homes

Good diversification

The 3 months correlation between CITY and Aedas is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA and CITY OFFICE 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 CITY OFFICE REIT 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 SA has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Aedas Homes go up and down completely randomly.

Pair Corralation between CITY OFFICE and Aedas Homes

Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 0.53 times more return on investment than Aedas Homes. However, CITY OFFICE REIT is 1.88 times less risky than Aedas Homes. It trades about 0.15 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.07 per unit of risk. If you would invest  418.00  in CITY OFFICE REIT on April 20, 2025 and sell it today you would earn a total of  70.00  from holding CITY OFFICE REIT or generate 16.75% return on investment over 90 days.

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

CITY OFFICE REIT  vs.  Aedas Homes SA

CITY OFFICE REIT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CITY OFFICE REIT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITY OFFICE reported solid returns over the last few months and may actually be approaching a breakup point.

Aedas Homes SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aedas Homes reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITY OFFICE and Aedas Homes

The main advantage of trading using opposite CITY OFFICE and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE 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 CITY OFFICE REIT and Aedas Homes SA 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.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.