Correlation Between Apple and AEON STORES

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

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

Diversification Opportunities for Apple and AEON STORES

-0.38

Correlation Coefficient

Apple  AEON STORES

Very good diversification

The 3 months correlation between Apple and AEON is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and AEON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON STORES and Apple 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 Apple Inc are associated (or correlated) with AEON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON STORES has no effect on the direction of Apple i.e., Apple and AEON STORES go up and down completely randomly.

Pair Corralation between Apple and AEON STORES

Assuming the 90 days trading horizon Apple Inc is expected to generate 14.48 times more return on investment than AEON STORES. However, Apple is 14.48 times more volatile than AEON STORES. It trades about 0.18 of its potential returns per unit of risk. AEON STORES is currently generating about -0.12 per unit of risk. If you would invest  20,061  in Apple Inc on September 13, 2024 and sell it today you would earn a total of  3,584  from holding Apple Inc or generate 17.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Apple Inc  vs.  AEON STORES

Apple Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

AEON STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEON STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AEON STORES is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and AEON STORES

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

The idea behind Apple Inc and AEON STORES 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.