Correlation Between AAEON Technology and Taiwan Sakura

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

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

Diversification Opportunities for AAEON Technology and Taiwan Sakura

0.78

Correlation Coefficient

AAEON Technology  Taiwan Sakura

Poor diversification

The 3 months correlation between AAEON and Taiwan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AAEON Technology and Taiwan Sakura Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sakura 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 Taiwan Sakura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sakura Corp has no effect on the direction of AAEON Technology i.e., AAEON Technology and Taiwan Sakura go up and down completely randomly.

Pair Corralation between AAEON Technology and Taiwan Sakura

Assuming the 90 days trading horizon AAEON Technology is expected to under-perform the Taiwan Sakura. In addition to that, AAEON Technology is 1.95 times more volatile than Taiwan Sakura Corp. It trades about -0.11 of its total potential returns per unit of risk. Taiwan Sakura Corp is currently generating about -0.07 per unit of volatility. If you would invest  8,770  in Taiwan Sakura Corp on September 14, 2024 and sell it today you would lose (370.00) from holding Taiwan Sakura Corp or give up 4.22% of portfolio value over 90 days.

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

AAEON Technology  vs.  Taiwan Sakura 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Taiwan Sakura Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Sakura Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiwan Sakura 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 Taiwan Sakura

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

The idea behind AAEON Technology and Taiwan Sakura 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.