Correlation Between AEON STORES and INFORMATION SVC

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

By analyzing existing cross correlation between AEON STORES and INFORMATION SVC GRP, you can compare the effects of market volatilities on AEON STORES and INFORMATION SVC 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 INFORMATION SVC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and INFORMATION SVC.

Diversification Opportunities for AEON STORES and INFORMATION SVC

0.34

Correlation Coefficient

AEON STORES  INFORMATION SVC

Weak diversification

The 3 months correlation between AEON and INFORMATION is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and INFORMATION SVC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFORMATION SVC GRP 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 INFORMATION SVC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFORMATION SVC GRP has no effect on the direction of AEON STORES i.e., AEON STORES and INFORMATION SVC go up and down completely randomly.

Pair Corralation between AEON STORES and INFORMATION SVC

Assuming the 90 days trading horizon AEON STORES is expected to generate 1.48 times less return on investment than INFORMATION SVC. But when comparing it to its historical volatility, AEON STORES is 4.17 times less risky than INFORMATION SVC. It trades about 0.13 of its potential returns per unit of risk. INFORMATION SVC GRP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  318.00  in INFORMATION SVC GRP on December 24, 2024 and sell it today you would earn a total of  16.00  from holding INFORMATION SVC GRP or generate 5.03% return on investment over 90 days.

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

AEON STORES  vs.  INFORMATION SVC GRP

AEON STORES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEON STORES are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. 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.

INFORMATION SVC GRP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INFORMATION SVC GRP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INFORMATION SVC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AEON STORES and INFORMATION SVC

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

The idea behind AEON STORES and INFORMATION SVC GRP 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.