Correlation Between Hufvudstaden and AEON MALL

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

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

Diversification Opportunities for Hufvudstaden and AEON MALL

0.77

Correlation Coefficient

Hufvudstaden  AEON MALL

Poor diversification

The 3 months correlation between Hufvudstaden and AEON is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hufvudstaden AB and AEON MALL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON MALL LTD and Hufvudstaden 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 Hufvudstaden AB are associated (or correlated) with AEON MALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON MALL LTD has no effect on the direction of Hufvudstaden i.e., Hufvudstaden and AEON MALL go up and down completely randomly.

Pair Corralation between Hufvudstaden and AEON MALL

Assuming the 90 days trading horizon Hufvudstaden AB is expected to under-perform the AEON MALL. In addition to that, Hufvudstaden is 1.04 times more volatile than AEON MALL LTD. It trades about -0.16 of its total potential returns per unit of risk. AEON MALL LTD is currently generating about -0.04 per unit of volatility. If you would invest  1,260  in AEON MALL LTD on September 23, 2024 and sell it today you would lose (50.00) from holding AEON MALL LTD or give up 3.97% of portfolio value over 90 days.

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

Hufvudstaden AB  vs.  AEON MALL LTD

Hufvudstaden AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hufvudstaden AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AEON MALL LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEON MALL LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AEON MALL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hufvudstaden and AEON MALL

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

The idea behind Hufvudstaden AB and AEON MALL 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.