Correlation Between AAEON Technology and Chang Type
Can any of the company-specific risk be diversified away by investing in both AAEON Technology and Chang Type 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 AAEON Technology and Chang Type into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAEON Technology and Chang Type Industrial, you can compare the effects of market volatilities on AAEON Technology and Chang Type 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 AAEON Technology with a short position of Chang Type. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAEON Technology and Chang Type.
Diversification Opportunities for AAEON Technology and Chang Type
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AAEON and Chang is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AAEON Technology and Chang Type Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chang Type Industrial and AAEON Technology 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 AAEON Technology are associated (or correlated) with Chang Type. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chang Type Industrial has no effect on the direction of AAEON Technology i.e., AAEON Technology and Chang Type go up and down completely randomly.
Pair Corralation between AAEON Technology and Chang Type
Assuming the 90 days trading horizon AAEON Technology is expected to under-perform the Chang Type. In addition to that, AAEON Technology is 1.75 times more volatile than Chang Type Industrial. It trades about -0.01 of its total potential returns per unit of risk. Chang Type Industrial is currently generating about 0.01 per unit of volatility. If you would invest 2,735 in Chang Type Industrial on October 7, 2024 and sell it today you would earn a total of 5.00 from holding Chang Type Industrial or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAEON Technology vs. Chang Type Industrial
Performance |
| Timeline |
| AAEON Technology |
| Chang Type Industrial |
AAEON Technology and Chang Type Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAEON Technology and Chang Type
The main advantage of trading using opposite AAEON Technology and Chang Type positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAEON Technology position performs unexpectedly, Chang Type 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 Chang Type will offset losses from the drop in Chang Type's long position.| AAEON Technology vs. ADLINK Technology | AAEON Technology vs. Ennoconn Corp | AAEON Technology vs. Advantech Co | AAEON Technology vs. Flytech Technology Co |
| Chang Type vs. Yong Shun Chemical | Chang Type vs. Chi Sheng Chemical | Chang Type vs. MediaTek | Chang Type vs. Eastern Media International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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