Correlation Between AAEON Technology and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both AAEON Technology and Merry Electronics 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 Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAEON Technology and Merry Electronics Co, you can compare the effects of market volatilities on AAEON Technology and Merry Electronics 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 Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAEON Technology and Merry Electronics.
Diversification Opportunities for AAEON Technology and Merry Electronics
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AAEON and Merry is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AAEON Technology and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics 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 Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of AAEON Technology i.e., AAEON Technology and Merry Electronics go up and down completely randomly.
Pair Corralation between AAEON Technology and Merry Electronics
Assuming the 90 days trading horizon AAEON Technology is expected to generate 2.52 times more return on investment than Merry Electronics. However, AAEON Technology is 2.52 times more volatile than Merry Electronics Co. It trades about 0.04 of its potential returns per unit of risk. Merry Electronics Co is currently generating about 0.04 per unit of risk. If you would invest 7,993 in AAEON Technology on October 25, 2024 and sell it today you would earn a total of 3,657 from holding AAEON Technology or generate 45.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
AAEON Technology vs. Merry Electronics Co
Performance |
| Timeline |
| AAEON Technology |
| Merry Electronics |
AAEON Technology and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAEON Technology and Merry Electronics
The main advantage of trading using opposite AAEON Technology and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAEON Technology position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.| AAEON Technology vs. ADLINK Technology | AAEON Technology vs. Ennoconn Corp | AAEON Technology vs. Advantech Co | AAEON Technology vs. Flytech Technology Co |
| Merry Electronics vs. TECO Electric Machinery | Merry Electronics vs. Da Cin Construction Co | Merry Electronics vs. Sinopower Semiconductor | Merry Electronics vs. Realtek Semiconductor Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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