Correlation Between Aeon Metals and OD6 Metals

Can any of the company-specific risk be diversified away by investing in both Aeon Metals and OD6 Metals 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 Metals and OD6 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aeon Metals and OD6 Metals, you can compare the effects of market volatilities on Aeon Metals and OD6 Metals 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 Metals with a short position of OD6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeon Metals and OD6 Metals.

Diversification Opportunities for Aeon Metals and OD6 Metals

0.0

Correlation Coefficient

Aeon Metals  OD6 Metals

Pay attention - limited upside

The 3 months correlation between Aeon and OD6 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Metals and OD6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OD6 Metals and Aeon Metals 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 Metals are associated (or correlated) with OD6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OD6 Metals has no effect on the direction of Aeon Metals i.e., Aeon Metals and OD6 Metals go up and down completely randomly.

Pair Corralation between Aeon Metals and OD6 Metals

Assuming the 90 days trading horizon Aeon Metals is expected to generate 1.0 times more return on investment than OD6 Metals. However, Aeon Metals is 1.0 times less risky than OD6 Metals. It trades about 0.0 of its potential returns per unit of risk. OD6 Metals is currently generating about -0.03 per unit of risk. If you would invest  1.10  in Aeon Metals on September 24, 2024 and sell it today you would lose (0.60) from holding Aeon Metals or give up 54.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aeon Metals  vs.  OD6 Metals

Aeon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Aeon Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

OD6 Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OD6 Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, OD6 Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeon Metals and OD6 Metals

The main advantage of trading using opposite Aeon Metals and OD6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeon Metals position performs unexpectedly, OD6 Metals 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 OD6 Metals will offset losses from the drop in OD6 Metals' long position.

The idea behind Aeon Metals and OD6 Metals 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.