Correlation Between Aeon Credit and Awanbiru Technology

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Can any of the company-specific risk be diversified away by investing in both Aeon Credit and Awanbiru 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 Aeon Credit and Awanbiru Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeon Credit Service and Awanbiru Technology Bhd, you can compare the effects of market volatilities on Aeon Credit and Awanbiru 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 Aeon Credit with a short position of Awanbiru Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeon Credit and Awanbiru Technology.

Diversification Opportunities for Aeon Credit and Awanbiru Technology

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aeon and Awanbiru is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Credit Service and Awanbiru Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awanbiru Technology Bhd and Aeon Credit 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 Credit Service are associated (or correlated) with Awanbiru Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awanbiru Technology Bhd has no effect on the direction of Aeon Credit i.e., Aeon Credit and Awanbiru Technology go up and down completely randomly.

Pair Corralation between Aeon Credit and Awanbiru Technology

Assuming the 90 days trading horizon Aeon Credit Service is expected to under-perform the Awanbiru Technology. But the stock apears to be less risky and, when comparing its historical volatility, Aeon Credit Service is 2.68 times less risky than Awanbiru Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Awanbiru Technology Bhd is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Awanbiru Technology Bhd on September 4, 2024 and sell it today you would lose (1.00) from holding Awanbiru Technology Bhd or give up 3.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.41%
ValuesDaily Returns

Aeon Credit Service  vs.  Awanbiru Technology Bhd

 Performance 
       Timeline  
Aeon Credit Service 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aeon Credit Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Aeon Credit is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Awanbiru Technology Bhd 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Awanbiru Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Awanbiru Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Aeon Credit and Awanbiru Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aeon Credit and Awanbiru Technology

The main advantage of trading using opposite Aeon Credit and Awanbiru Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeon Credit position performs unexpectedly, Awanbiru 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 Awanbiru Technology will offset losses from the drop in Awanbiru Technology's long position.
The idea behind Aeon Credit Service and Awanbiru Technology Bhd 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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