Correlation Between AAEON Technology and Hong Yi
Can any of the company-specific risk be diversified away by investing in both AAEON Technology and Hong Yi 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 AAEON Technology and Hong Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAEON Technology and Hong Yi Fiber, you can compare the effects of market volatilities on AAEON Technology and Hong Yi 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 AAEON Technology with a short position of Hong Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAEON Technology and Hong Yi.
Diversification Opportunities for AAEON Technology and Hong Yi
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between AAEON and Hong is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AAEON Technology and Hong Yi Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Yi Fiber and AAEON Technology 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 AAEON Technology are associated (or correlated) with Hong Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Yi Fiber has no effect on the direction of AAEON Technology i.e., AAEON Technology and Hong Yi go up and down completely randomly.
Pair Corralation between AAEON Technology and Hong Yi
Assuming the 90 days trading horizon AAEON Technology is expected to generate 3.21 times more return on investment than Hong Yi. However, AAEON Technology is 3.21 times more volatile than Hong Yi Fiber. It trades about 0.1 of its potential returns per unit of risk. Hong Yi Fiber is currently generating about -0.17 per unit of risk. If you would invest 12,800 in AAEON Technology on December 5, 2024 and sell it today you would earn a total of 1,550 from holding AAEON Technology or generate 12.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AAEON Technology vs. Hong Yi Fiber
Performance |
Timeline |
AAEON Technology |
Hong Yi Fiber |
AAEON Technology and Hong Yi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AAEON Technology and Hong Yi
The main advantage of trading using opposite AAEON Technology and Hong Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAEON Technology position performs unexpectedly, Hong Yi 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 Hong Yi will offset losses from the drop in Hong Yi's long position.AAEON Technology vs. ADLINK Technology | AAEON Technology vs. Ennoconn Corp | AAEON Technology vs. Advantech Co | AAEON Technology vs. Flytech Technology Co |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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