Correlation Between AAEON Technology and IEI Integration

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

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

Diversification Opportunities for AAEON Technology and IEI Integration

-0.14

Correlation Coefficient

AAEON Technology  IEI Integration

Good diversification

The 3 months correlation between AAEON and IEI is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding AAEON Technology and IEI Integration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IEI Integration Corp 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 IEI Integration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IEI Integration Corp has no effect on the direction of AAEON Technology i.e., AAEON Technology and IEI Integration go up and down completely randomly.

Pair Corralation between AAEON Technology and IEI Integration

Assuming the 90 days trading horizon AAEON Technology is expected to generate 2.2 times more return on investment than IEI Integration. However, AAEON Technology is 2.2 times more volatile than IEI Integration Corp. It trades about 0.04 of its potential returns per unit of risk. IEI Integration Corp is currently generating about 0.01 per unit of risk. If you would invest  7,834  in AAEON Technology on October 12, 2024 and sell it today you would earn a total of  4,616  from holding AAEON Technology or generate 58.92% 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.  IEI Integration Corp

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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

IEI Integration Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IEI Integration Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with AAEON Technology and IEI Integration

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

The idea behind AAEON Technology and IEI Integration Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.