Correlation Between AAEON Technology and BES Engineering
Can any of the company-specific risk be diversified away by investing in both AAEON Technology and BES Engineering 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 BES Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAEON Technology and BES Engineering Co, you can compare the effects of market volatilities on AAEON Technology and BES Engineering 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 BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAEON Technology and BES Engineering.
Diversification Opportunities for AAEON Technology and BES Engineering
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAEON and BES is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AAEON Technology and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering 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 BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of AAEON Technology i.e., AAEON Technology and BES Engineering go up and down completely randomly.
Pair Corralation between AAEON Technology and BES Engineering
Assuming the 90 days trading horizon AAEON Technology is expected to generate 1.06 times more return on investment than BES Engineering. However, AAEON Technology is 1.06 times more volatile than BES Engineering Co. It trades about -0.1 of its potential returns per unit of risk. BES Engineering Co is currently generating about -0.14 per unit of risk. If you would invest 16,931 in AAEON Technology on September 1, 2024 and sell it today you would lose (4,631) from holding AAEON Technology or give up 27.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAEON Technology vs. BES Engineering Co
Performance |
| Timeline |
| AAEON Technology |
| BES Engineering |
AAEON Technology and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAEON Technology and BES Engineering
The main advantage of trading using opposite AAEON Technology and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAEON Technology position performs unexpectedly, BES Engineering 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 BES Engineering will offset losses from the drop in BES Engineering's long position.| AAEON Technology vs. Quanta Computer | AAEON Technology vs. Wiwynn Corp | AAEON Technology vs. Getac Technology Corp | AAEON Technology vs. InnoDisk |
| BES Engineering vs. Hung Sheng Construction | BES Engineering vs. Taiwan Glass Ind | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Taiwan Tea 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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