Correlation Between IEI Integration and AAEON Technology

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

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

Diversification Opportunities for IEI Integration and AAEON Technology

-0.2

Correlation Coefficient

IEI Integration  AAEON Technology

Good diversification

The 3 months correlation between IEI and AAEON is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding IEI Integration Corp and AAEON Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAEON Technology and IEI Integration 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 IEI Integration Corp are associated (or correlated) with AAEON Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAEON Technology has no effect on the direction of IEI Integration i.e., IEI Integration and AAEON Technology go up and down completely randomly.

Pair Corralation between IEI Integration and AAEON Technology

Assuming the 90 days trading horizon IEI Integration is expected to generate 4.73 times less return on investment than AAEON Technology. But when comparing it to its historical volatility, IEI Integration Corp is 2.19 times less risky than AAEON Technology. It trades about 0.02 of its potential returns per unit of risk. AAEON Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,694  in AAEON Technology on September 24, 2024 and sell it today you would earn a total of  4,556  from holding AAEON Technology or generate 59.21% return on investment over 90 days.

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

IEI Integration Corp  vs.  AAEON Technology

IEI Integration Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IEI Integration Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IEI Integration is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AAEON Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AAEON Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with IEI Integration and AAEON Technology

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

The idea behind IEI Integration Corp and AAEON Technology 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.