Correlation Between Alumina and Aeon Co
Can any of the company-specific risk be diversified away by investing in both Alumina 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 Alumina and Aeon Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alumina Limited and Aeon Co Ltd, you can compare the effects of market volatilities on Alumina 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 Alumina with a short position of Aeon Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumina and Aeon Co.
Diversification Opportunities for Alumina and Aeon Co
Excellent diversification
The 3 months correlation between Alumina and Aeon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alumina Limited and Aeon Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Co and Alumina 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 Alumina Limited 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 Alumina i.e., Alumina and Aeon Co go up and down completely randomly.
Pair Corralation between Alumina and Aeon Co
Assuming the 90 days horizon Alumina Limited is expected to generate 2.23 times more return on investment than Aeon Co. However, Alumina is 2.23 times more volatile than Aeon Co Ltd. It trades about 0.02 of its potential returns per unit of risk. Aeon Co Ltd is currently generating about 0.02 per unit of risk. If you would invest 100.00 in Alumina Limited on September 23, 2024 and sell it today you would earn a total of 11.00 from holding Alumina Limited or generate 11.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 80.68% |
Values | Daily Returns |
Alumina Limited vs. Aeon Co Ltd
Performance |
Timeline |
Alumina Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aeon Co |
Alumina and Aeon Co Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alumina and Aeon Co
The main advantage of trading using opposite Alumina and Aeon Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumina 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.Alumina vs. Alvarium Tiedemann Holdings | Alumina vs. Bluerock Homes Trust | Alumina vs. SunLink Health Systems | Alumina vs. Stepstone Group |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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