Correlation Between Aeon Co and Tokyu Corp

Can any of the company-specific risk be diversified away by investing in both Aeon Co and Tokyu Corp 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 Tokyu Corp 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 Tokyu Corp ADR, you can compare the effects of market volatilities on Aeon Co and Tokyu Corp 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 Tokyu Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeon Co and Tokyu Corp.

Diversification Opportunities for Aeon Co and Tokyu Corp

0.73

Correlation Coefficient

Aeon Co  Tokyu Corp

Poor diversification

The 3 months correlation between Aeon and Tokyu is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Co Ltd and Tokyu Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyu Corp ADR 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 Tokyu Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyu Corp ADR has no effect on the direction of Aeon Co i.e., Aeon Co and Tokyu Corp go up and down completely randomly.

Pair Corralation between Aeon Co and Tokyu Corp

If you would invest  1,177  in Tokyu Corp ADR on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Tokyu Corp ADR or generate 0.0% return on investment over 90 days.

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

Aeon Co Ltd  vs.  Tokyu Corp ADR

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 uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Tokyu Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aeon Co and Tokyu Corp

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

The idea behind Aeon Co Ltd and Tokyu Corp 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.