Correlation Between AOI Electronics and Informa PLC
Can any of the company-specific risk be diversified away by investing in both AOI Electronics and Informa PLC 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 AOI Electronics and Informa PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOI Electronics Co and Informa PLC, you can compare the effects of market volatilities on AOI Electronics and Informa PLC 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 AOI Electronics with a short position of Informa PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOI Electronics and Informa PLC.
Diversification Opportunities for AOI Electronics and Informa PLC
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AOI and Informa is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding AOI Electronics Co and Informa PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informa PLC and AOI Electronics 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 AOI Electronics Co are associated (or correlated) with Informa PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informa PLC has no effect on the direction of AOI Electronics i.e., AOI Electronics and Informa PLC go up and down completely randomly.
Pair Corralation between AOI Electronics and Informa PLC
Assuming the 90 days trading horizon AOI Electronics Co is expected to generate 0.08 times more return on investment than Informa PLC. However, AOI Electronics Co is 13.14 times less risky than Informa PLC. It trades about 0.21 of its potential returns per unit of risk. Informa PLC is currently generating about -0.2 per unit of risk. If you would invest 1,850 in AOI Electronics Co on January 10, 2025 and sell it today you would earn a total of 18.00 from holding AOI Electronics Co or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AOI Electronics Co vs. Informa PLC
Performance |
| Timeline |
| AOI Electronics |
| Informa PLC |
AOI Electronics and Informa PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AOI Electronics and Informa PLC
The main advantage of trading using opposite AOI Electronics and Informa PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOI Electronics position performs unexpectedly, Informa PLC 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 Informa PLC will offset losses from the drop in Informa PLC's long position.| AOI Electronics vs. Fair Isaac Corp | AOI Electronics vs. PICKN PAY STORES | AOI Electronics vs. Wizz Air Holdings | AOI Electronics vs. Ryanair Holdings plc |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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