Correlation Between IBASE Technology and AAEON Technology
Can any of the company-specific risk be diversified away by investing in both IBASE Technology and AAEON Technology 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 IBASE Technology and AAEON Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBASE Technology and AAEON Technology, you can compare the effects of market volatilities on IBASE Technology and AAEON Technology 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 IBASE Technology with a short position of AAEON Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBASE Technology and AAEON Technology.
Diversification Opportunities for IBASE Technology and AAEON Technology
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IBASE and AAEON is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding IBASE Technology and AAEON Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAEON Technology and IBASE 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 IBASE Technology are associated (or correlated) with AAEON Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAEON Technology has no effect on the direction of IBASE Technology i.e., IBASE Technology and AAEON Technology go up and down completely randomly.
Pair Corralation between IBASE Technology and AAEON Technology
Assuming the 90 days trading horizon IBASE Technology is expected to under-perform the AAEON Technology. But the stock apears to be less risky and, when comparing its historical volatility, IBASE Technology is 1.52 times less risky than AAEON Technology. The stock trades about -0.19 of its potential returns per unit of risk. The AAEON Technology is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 12,900 in AAEON Technology on August 27, 2024 and sell it today you would lose (550.00) from holding AAEON Technology or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IBASE Technology vs. AAEON Technology
Performance |
| Timeline |
| IBASE Technology |
| AAEON Technology |
IBASE Technology and AAEON Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBASE Technology and AAEON Technology
The main advantage of trading using opposite IBASE Technology and AAEON Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBASE Technology position performs unexpectedly, AAEON Technology 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 AAEON Technology will offset losses from the drop in AAEON Technology's long position.| IBASE Technology vs. Axiomtek Co | IBASE Technology vs. Lanner Electronics | IBASE Technology vs. IEI Integration Corp | IBASE Technology vs. Advantech Co |
| AAEON Technology vs. Quanta Computer | AAEON Technology vs. Wiwynn Corp | AAEON Technology vs. Getac Technology Corp | AAEON Technology vs. IEI Integration 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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