Correlation Between Aeon Credit and SSF Home

Can any of the company-specific risk be diversified away by investing in both Aeon Credit and SSF Home 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 Credit and SSF Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aeon Credit Service and SSF Home Group, you can compare the effects of market volatilities on Aeon Credit and SSF Home 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 Credit with a short position of SSF Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeon Credit and SSF Home.

Diversification Opportunities for Aeon Credit and SSF Home

-0.42

Correlation Coefficient

Aeon Credit  SSF Home

Very good diversification

The 3 months correlation between Aeon and SSF is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Credit Service and SSF Home Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSF Home Group and Aeon Credit 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 Credit Service are associated (or correlated) with SSF Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSF Home Group has no effect on the direction of Aeon Credit i.e., Aeon Credit and SSF Home go up and down completely randomly.

Pair Corralation between Aeon Credit and SSF Home

Assuming the 90 days trading horizon Aeon Credit Service is expected to under-perform the SSF Home. But the stock apears to be less risky and, when comparing its historical volatility, Aeon Credit Service is 1.53 times less risky than SSF Home. The stock trades about -0.13 of its potential returns per unit of risk. The SSF Home Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  34.00  in SSF Home Group on September 28, 2024 and sell it today you would earn a total of  0.00  from holding SSF Home Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aeon Credit Service  vs.  SSF Home Group

Aeon Credit Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeon Credit Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

SSF Home Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSF Home Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SSF Home is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Aeon Credit and SSF Home

The main advantage of trading using opposite Aeon Credit and SSF Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeon Credit position performs unexpectedly, SSF Home 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 SSF Home will offset losses from the drop in SSF Home's long position.

The idea behind Aeon Credit Service and SSF Home Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.