Correlation Between Aeon Co and H2O Retailing
Can any of the company-specific risk be diversified away by investing in both Aeon Co and H2O Retailing 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 Co and H2O Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeon Co and H2O Retailing, you can compare the effects of market volatilities on Aeon Co and H2O Retailing 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 Co with a short position of H2O Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeon Co and H2O Retailing.
Diversification Opportunities for Aeon Co and H2O Retailing
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aeon and H2O is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Co and H2O Retailing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H2O Retailing and Aeon Co 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 Co are associated (or correlated) with H2O Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H2O Retailing has no effect on the direction of Aeon Co i.e., Aeon Co and H2O Retailing go up and down completely randomly.
Pair Corralation between Aeon Co and H2O Retailing
Assuming the 90 days trading horizon Aeon Co is expected to generate 32.61 times less return on investment than H2O Retailing. But when comparing it to its historical volatility, Aeon Co is 1.4 times less risky than H2O Retailing. It trades about 0.01 of its potential returns per unit of risk. H2O Retailing is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,320 in H2O Retailing on November 3, 2024 and sell it today you would earn a total of 110.00 from holding H2O Retailing or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeon Co vs. H2O Retailing
Performance |
| Timeline |
| Aeon Co |
| H2O Retailing |
Aeon Co and H2O Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeon Co and H2O Retailing
The main advantage of trading using opposite Aeon Co and H2O Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeon Co position performs unexpectedly, H2O Retailing 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 H2O Retailing will offset losses from the drop in H2O Retailing's long position.| Aeon Co vs. GEAR4MUSIC LS 10 | Aeon Co vs. BOS BETTER ONLINE | Aeon Co vs. Zoom Video Communications | Aeon Co vs. Highlight Communications AG |
| H2O Retailing vs. MHP Hotel AG | H2O Retailing vs. COVIVIO HOTELS INH | H2O Retailing vs. DALATA HOTEL | H2O Retailing vs. CENTURIA OFFICE REIT |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |