Correlation Between Aeon Credit and PIE Industrial

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

Diversification Opportunities for Aeon Credit and PIE Industrial

-0.88

Correlation Coefficient

Aeon Credit  PIE Industrial

Pay attention - limited upside

The 3 months correlation between Aeon and PIE is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Credit Service and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial 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 PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of Aeon Credit i.e., Aeon Credit and PIE Industrial go up and down completely randomly.

Pair Corralation between Aeon Credit and PIE Industrial

Assuming the 90 days trading horizon Aeon Credit Service is expected to under-perform the PIE Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Aeon Credit Service is 2.07 times less risky than PIE Industrial. The stock trades about -0.22 of its potential returns per unit of risk. The PIE Industrial Bhd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  531.00  in PIE Industrial Bhd on October 7, 2024 and sell it today you would earn a total of  76.00  from holding PIE Industrial Bhd or generate 14.31% return on investment over 90 days.

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

Aeon Credit Service  vs.  PIE Industrial 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 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.

PIE Industrial Bhd

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PIE Industrial Bhd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PIE Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeon Credit and PIE Industrial

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

The idea behind Aeon Credit Service and PIE Industrial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.