Correlation Between Aeon Co and Henderson Investment

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

By analyzing existing cross correlation between Aeon Co Ltd and Henderson Investment Ltd, you can compare the effects of market volatilities on Aeon Co and Henderson Investment 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 Co with a short position of Henderson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeon Co and Henderson Investment.

Diversification Opportunities for Aeon Co and Henderson Investment

0.49

Correlation Coefficient

Aeon Co  Henderson Investment

Very weak diversification

The 3 months correlation between Aeon and Henderson is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Co Ltd and Henderson Investment Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Investment and Aeon Co 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 Co Ltd are associated (or correlated) with Henderson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Investment has no effect on the direction of Aeon Co i.e., Aeon Co and Henderson Investment go up and down completely randomly.

Pair Corralation between Aeon Co and Henderson Investment

Assuming the 90 days horizon Aeon Co Ltd is expected to under-perform the Henderson Investment. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aeon Co Ltd is 12.53 times less risky than Henderson Investment. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Henderson Investment Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7.80  in Henderson Investment Ltd on October 9, 2024 and sell it today you would lose (4.30) from holding Henderson Investment Ltd or give up 55.13% of portfolio value over 90 days.

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

Aeon Co Ltd  vs.  Henderson Investment Ltd

Aeon Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeon Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Aeon Co is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Henderson Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henderson Investment Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aeon Co and Henderson Investment

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

The idea behind Aeon Co Ltd and Henderson Investment Ltd 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..