Correlation Between Sekisui House and Aedas Homes

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Can any of the company-specific risk be diversified away by investing in both Sekisui House 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 Sekisui House and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sekisui House and Aedas Homes SA, you can compare the effects of market volatilities on Sekisui House 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 Sekisui House with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui House and Aedas Homes.

Diversification Opportunities for Sekisui House and Aedas Homes

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Sekisui and Aedas is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui House 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 Sekisui House 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 Sekisui House 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 Sekisui House i.e., Sekisui House and Aedas Homes go up and down completely randomly.

Pair Corralation between Sekisui House and Aedas Homes

Assuming the 90 days trading horizon Sekisui House is expected to under-perform the Aedas Homes. But the stock apears to be less risky and, when comparing its historical volatility, Sekisui House is 2.15 times less risky than Aedas Homes. The stock trades about -0.08 of its potential returns per unit of risk. The Aedas Homes SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,904  in Aedas Homes SA on April 20, 2025 and sell it today you would earn a total of  211.00  from holding Aedas Homes SA or generate 11.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sekisui House  vs.  Aedas Homes SA

 Performance 
       Timeline  
Sekisui House 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Sekisui House has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Aedas Homes SA 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
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.

Sekisui House and Aedas Homes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sekisui House and Aedas Homes

The main advantage of trading using opposite Sekisui House and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekisui House 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 Sekisui House 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.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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