Correlation Between Dow Jones and Aeon Credit
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aeon Credit 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 Dow Jones and Aeon Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Aeon Credit Service, you can compare the effects of market volatilities on Dow Jones and Aeon Credit 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 Dow Jones with a short position of Aeon Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aeon Credit.
Diversification Opportunities for Dow Jones and Aeon Credit
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Aeon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aeon Credit Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Credit Service and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Aeon Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Credit Service has no effect on the direction of Dow Jones i.e., Dow Jones and Aeon Credit go up and down completely randomly.
Pair Corralation between Dow Jones and Aeon Credit
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.13 times more return on investment than Aeon Credit. However, Dow Jones is 1.13 times more volatile than Aeon Credit Service. It trades about 0.19 of its potential returns per unit of risk. Aeon Credit Service is currently generating about -0.16 per unit of risk. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 178,156 from holding Dow Jones Industrial or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aeon Credit Service
Performance |
| Timeline |
Dow Jones and Aeon Credit Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aeon Credit Service
Pair trading matchups for Aeon Credit
Pair Trading with Dow Jones and Aeon Credit
The main advantage of trading using opposite Dow Jones and Aeon Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aeon Credit 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 Aeon Credit will offset losses from the drop in Aeon Credit's long position.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| Aeon Credit vs. Oriental Food Industries | Aeon Credit vs. Hong Leong Bank | Aeon Credit vs. Alliance Financial Group | Aeon Credit vs. Kawan Food Bhd |
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 Stocks Directory module to find actively traded stocks across global markets.
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