Correlation Between AES and EON SE

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

By analyzing existing cross correlation between The AES and EON SE ADR, you can compare the effects of market volatilities on AES and EON SE 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 AES with a short position of EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and EON SE.

Diversification Opportunities for AES and EON SE

-0.79

Correlation Coefficient

AES  EON SE

Pay attention - limited upside

The 3 months correlation between AES and EON is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding The AES and EON SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE ADR and AES 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 The AES are associated (or correlated) with EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE ADR has no effect on the direction of AES i.e., AES and EON SE go up and down completely randomly.

Pair Corralation between AES and EON SE

If you would invest  1,060  in EON SE ADR on August 31, 2024 and sell it today you would earn a total of  0.00  from holding EON SE ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

The AES  vs.  EON SE ADR

AES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The AES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EON SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EON SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, EON SE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AES and EON SE

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

The idea behind The AES and EON SE ADR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.