Correlation Between AAON and Compagnie

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

By analyzing existing cross correlation between AAON Inc and Compagnie de Saint Gobain, you can compare the effects of market volatilities on AAON and Compagnie 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 AAON with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAON and Compagnie.

Diversification Opportunities for AAON and Compagnie

-0.88

Correlation Coefficient

AAON  Compagnie

Pay attention - limited upside

The 3 months correlation between AAON and Compagnie is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint and AAON 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 AAON Inc are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of AAON i.e., AAON and Compagnie go up and down completely randomly.

Pair Corralation between AAON and Compagnie

Given the investment horizon of 90 days AAON Inc is expected to under-perform the Compagnie. In addition to that, AAON is 2.48 times more volatile than Compagnie de Saint Gobain. It trades about -0.13 of its total potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.18 per unit of volatility. If you would invest  8,964  in Compagnie de Saint Gobain on December 29, 2024 and sell it today you would earn a total of  1,571  from holding Compagnie de Saint Gobain or generate 17.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	85.25%
Values	Daily Returns

AAON Inc  vs.  Compagnie de Saint Gobain

AAON Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days AAON Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Compagnie de Saint

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Compagnie reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAON and Compagnie

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

The idea behind AAON Inc and Compagnie de Saint Gobain 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.