Correlation Between AAEON Technology and Fulgent Sun

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

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

Diversification Opportunities for AAEON Technology and Fulgent Sun

-0.14

Correlation Coefficient

AAEON Technology  Fulgent Sun

Good diversification

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

Pair Corralation between AAEON Technology and Fulgent Sun

Assuming the 90 days trading horizon AAEON Technology is expected to under-perform the Fulgent Sun. But the stock apears to be less risky and, when comparing its historical volatility, AAEON Technology is 1.14 times less risky than Fulgent Sun. The stock trades about -0.17 of its potential returns per unit of risk. The Fulgent Sun International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12,200  in Fulgent Sun International on October 22, 2024 and sell it today you would earn a total of  800.00  from holding Fulgent Sun International or generate 6.56% 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.  Fulgent Sun International

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.

Fulgent Sun International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fulgent Sun International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fulgent Sun showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAEON Technology and Fulgent Sun

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

The idea behind AAEON Technology and Fulgent Sun International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.