Correlation Between AEON MALL and NEW WORLD

Can any of the company-specific risk be diversified away by investing in both AEON MALL and NEW WORLD 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 MALL and NEW WORLD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEON MALL LTD and NEW WORLD DEVCO, you can compare the effects of market volatilities on AEON MALL and NEW WORLD 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 MALL with a short position of NEW WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON MALL and NEW WORLD.

Diversification Opportunities for AEON MALL and NEW WORLD

-0.05

Correlation Coefficient

AEON MALL  NEW WORLD

Good diversification

The 3 months correlation between AEON and NEW is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AEON MALL LTD and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO and AEON MALL 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 MALL LTD are associated (or correlated) with NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of AEON MALL i.e., AEON MALL and NEW WORLD go up and down completely randomly.

Pair Corralation between AEON MALL and NEW WORLD

Assuming the 90 days horizon AEON MALL LTD is expected to generate 0.6 times more return on investment than NEW WORLD. However, AEON MALL LTD is 1.68 times less risky than NEW WORLD. It trades about -0.03 of its potential returns per unit of risk. NEW WORLD DEVCO is currently generating about -0.9 per unit of risk. If you would invest  1,230  in AEON MALL LTD on October 10, 2024 and sell it today you would lose (10.00) from holding AEON MALL LTD or give up 0.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

AEON MALL LTD  vs.  NEW WORLD DEVCO

AEON MALL LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEON MALL LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AEON MALL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NEW WORLD DEVCO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEW WORLD DEVCO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AEON MALL and NEW WORLD

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

The idea behind AEON MALL LTD and NEW WORLD DEVCO 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..