Correlation Between Aeon Credit and Icon Offshore

Can any of the company-specific risk be diversified away by investing in both Aeon Credit and Icon Offshore 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 Icon Offshore 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 Icon Offshore Bhd, you can compare the effects of market volatilities on Aeon Credit and Icon Offshore 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 Icon Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeon Credit and Icon Offshore.

Diversification Opportunities for Aeon Credit and Icon Offshore

0.75

Correlation Coefficient

Aeon Credit  Icon Offshore

Poor diversification

The 3 months correlation between Aeon and Icon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Credit Service and Icon Offshore Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Offshore 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 Icon Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Offshore Bhd has no effect on the direction of Aeon Credit i.e., Aeon Credit and Icon Offshore go up and down completely randomly.

Pair Corralation between Aeon Credit and Icon Offshore

Assuming the 90 days trading horizon Aeon Credit is expected to generate 4.47 times less return on investment than Icon Offshore. But when comparing it to its historical volatility, Aeon Credit Service is 3.05 times less risky than Icon Offshore. It trades about 0.04 of its potential returns per unit of risk. Icon Offshore Bhd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Icon Offshore Bhd on October 9, 2024 and sell it today you would earn a total of  26.00  from holding Icon Offshore Bhd or generate 34.21% return on investment over 90 days.

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

Aeon Credit Service  vs.  Icon Offshore Bhd

Aeon Credit Service

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Icon Offshore Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Offshore Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Aeon Credit and Icon Offshore

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

The idea behind Aeon Credit Service and Icon Offshore 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.