Correlation Between BELIMO Holding and AAON

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

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

Diversification Opportunities for BELIMO Holding and AAON

-0.06

Correlation Coefficient

BELIMO Holding  AAON

Good diversification

The 3 months correlation between BELIMO and AAON is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding BELIMO Holding AG and AAON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAON Inc and BELIMO Holding 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 BELIMO Holding AG are associated (or correlated) with AAON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAON Inc has no effect on the direction of BELIMO Holding i.e., BELIMO Holding and AAON go up and down completely randomly.

Pair Corralation between BELIMO Holding and AAON

Assuming the 90 days horizon BELIMO Holding is expected to generate 1.62 times less return on investment than AAON. But when comparing it to its historical volatility, BELIMO Holding AG is 1.3 times less risky than AAON. It trades about 0.09 of its potential returns per unit of risk. AAON Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,741  in AAON Inc on October 1, 2024 and sell it today you would earn a total of  6,401  from holding AAON Inc or generate 111.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.47%
Values	Daily Returns

BELIMO Holding AG  vs.  AAON Inc

BELIMO Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BELIMO Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BELIMO Holding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

AAON Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AAON Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AAON displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BELIMO Holding and AAON

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

The idea behind BELIMO Holding AG and AAON 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.