Correlation Between Dillards Capital and Aeon Co

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

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

Diversification Opportunities for Dillards Capital and Aeon Co

-0.66

Correlation Coefficient

Dillards Capital  Aeon Co

Excellent diversification

The 3 months correlation between Dillards and Aeon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dillards Capital Trust and Aeon Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Co and Dillards Capital 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 Dillards Capital Trust 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 Dillards Capital i.e., Dillards Capital and Aeon Co go up and down completely randomly.

Pair Corralation between Dillards Capital and Aeon Co

Considering the 90-day investment horizon Dillards Capital Trust is expected to generate 0.2 times more return on investment than Aeon Co. However, Dillards Capital Trust is 4.96 times less risky than Aeon Co. It trades about 0.03 of its potential returns per unit of risk. Aeon Co Ltd is currently generating about -0.15 per unit of risk. If you would invest  2,559  in Dillards Capital Trust on September 23, 2024 and sell it today you would earn a total of  16.00  from holding Dillards Capital Trust or generate 0.63% return on investment over 90 days.

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

Dillards Capital Trust  vs.  Aeon Co Ltd

Dillards Capital Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards Capital Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Dillards Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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 Dillards Capital and Aeon Co

The main advantage of trading using opposite Dillards Capital and Aeon Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards Capital 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 Dillards Capital Trust 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.