Correlation Between AEON STORES and Apple

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

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

Diversification Opportunities for AEON STORES and Apple

-0.48

Correlation Coefficient

AEON STORES  Apple

Very good diversification

The 3 months correlation between AEON and Apple is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and AEON STORES 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 STORES are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of AEON STORES i.e., AEON STORES and Apple go up and down completely randomly.

Pair Corralation between AEON STORES and Apple

Assuming the 90 days trading horizon AEON STORES is expected to generate 1.82 times more return on investment than Apple. However, AEON STORES is 1.82 times more volatile than Apple Inc. It trades about -0.07 of its potential returns per unit of risk. Apple Inc is currently generating about -0.21 per unit of risk. If you would invest  6.05  in AEON STORES on October 15, 2024 and sell it today you would lose (0.15) from holding AEON STORES or give up 2.48% of portfolio value over 90 days.

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

AEON STORES  vs.  Apple Inc

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Apple Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AEON STORES and Apple

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

The idea behind AEON STORES and Apple Inc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.