Correlation Between Armada Hflr and Aeon Co

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

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

Diversification Opportunities for Armada Hflr and Aeon Co

0.49

Correlation Coefficient

Armada Hflr  Aeon Co

Very weak diversification

The 3 months correlation between Armada and Aeon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Aeon Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Co and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Aeon Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Co has no effect on the direction of Armada Hflr i.e., Armada Hflr and Aeon Co go up and down completely randomly.

Pair Corralation between Armada Hflr and Aeon Co

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Aeon Co. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.02 times less risky than Aeon Co. The stock trades about -0.15 of its potential returns per unit of risk. The Aeon Co Ltd is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  2,737  in Aeon Co Ltd on September 24, 2024 and sell it today you would lose (381.00) from holding Aeon Co Ltd or give up 13.92% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  Aeon Co Ltd

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Aeon Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeon Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Armada Hflr and Aeon Co

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

The idea behind Armada Hflr Pr and Aeon Co Ltd 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.