Correlation Between AEON STORES and PAX Global
Can any of the company-specific risk be diversified away by investing in both AEON STORES and PAX Global 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 AEON STORES and PAX Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEON STORES and PAX Global Technology, you can compare the effects of market volatilities on AEON STORES and PAX Global 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 AEON STORES with a short position of PAX Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and PAX Global.
Diversification Opportunities for AEON STORES and PAX Global
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AEON and PAX is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and PAX Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAX Global Technology and AEON STORES 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 AEON STORES are associated (or correlated) with PAX Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAX Global Technology has no effect on the direction of AEON STORES i.e., AEON STORES and PAX Global go up and down completely randomly.
Pair Corralation between AEON STORES and PAX Global
Assuming the 90 days trading horizon AEON STORES is expected to under-perform the PAX Global. But the stock apears to be less risky and, when comparing its historical volatility, AEON STORES is 1.75 times less risky than PAX Global. The stock trades about -0.01 of its potential returns per unit of risk. The PAX Global Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 20.00 in PAX Global Technology on September 12, 2024 and sell it today you would earn a total of 42.00 from holding PAX Global Technology or generate 210.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEON STORES vs. PAX Global Technology
Performance |
| Timeline |
| AEON STORES |
| PAX Global Technology |
AEON STORES and PAX Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEON STORES and PAX Global
The main advantage of trading using opposite AEON STORES and PAX Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES position performs unexpectedly, PAX Global 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 PAX Global will offset losses from the drop in PAX Global's long position.| AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc |
| PAX Global vs. Zoom Video Communications | PAX Global vs. COSTCO WHOLESALE CDR | PAX Global vs. AEON STORES | PAX Global vs. INTERSHOP Communications Aktiengesellschaft |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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