Correlation Between Aedas Homes and Media Investment

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

By analyzing existing cross correlation between Aedas Homes SL and Media Investment Optimization, you can compare the effects of market volatilities on Aedas Homes and Media Investment 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 Media Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Media Investment.

Diversification Opportunities for Aedas Homes and Media Investment

0.28

Correlation Coefficient

Aedas Homes  Media Investment

Modest diversification

The 3 months correlation between Aedas and Media is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SL and Media Investment Optimization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Investment Opt 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 SL are associated (or correlated) with Media Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Investment Opt has no effect on the direction of Aedas Homes i.e., Aedas Homes and Media Investment go up and down completely randomly.

Pair Corralation between Aedas Homes and Media Investment

Assuming the 90 days trading horizon Aedas Homes SL is expected to generate 2.6 times more return on investment than Media Investment. However, Aedas Homes is 2.6 times more volatile than Media Investment Optimization. It trades about -0.01 of its potential returns per unit of risk. Media Investment Optimization is currently generating about -0.25 per unit of risk. If you would invest  2,304  in Aedas Homes SL on April 23, 2025 and sell it today you would lose (139.00) from holding Aedas Homes SL or give up 6.03% of portfolio value over 90 days.

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

Aedas Homes SL  vs.  Media Investment Optimization

Aedas Homes SL

Risk-Adjusted Performance

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.

Media Investment Opt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Media Investment Optimization has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aedas Homes and Media Investment

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

The idea behind Aedas Homes SL and Media Investment Optimization 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.