Correlation Between AEON and UBQ

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

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

Diversification Opportunities for AEON and UBQ

1.0

Correlation Coefficient

AEON  UBQ

No risk reduction

The 3 months correlation between AEON and UBQ is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding AEON and UBQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBQ and AEON 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 are associated (or correlated) with UBQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBQ has no effect on the direction of AEON i.e., AEON and UBQ go up and down completely randomly.

Pair Corralation between AEON and UBQ

Assuming the 90 days trading horizon AEON is expected to generate 1.16 times more return on investment than UBQ. However, AEON is 1.16 times more volatile than UBQ. It trades about 0.23 of its potential returns per unit of risk. UBQ is currently generating about 0.25 per unit of risk. If you would invest  14.00  in AEON on September 2, 2024 and sell it today you would earn a total of  10.00  from holding AEON or generate 71.43% return on investment over 90 days.

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

AEON  vs.  UBQ

AEON

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AEON are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, AEON exhibited solid returns over the last few months and may actually be approaching a breakup point.

UBQ

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBQ are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UBQ exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEON and UBQ

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

The idea behind AEON and UBQ 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.