Correlation Between CHIBA BANK and AEON MALL

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

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

Diversification Opportunities for CHIBA BANK and AEON MALL

0.08

Correlation Coefficient

CHIBA BANK  AEON MALL

Significant diversification

The 3 months correlation between CHIBA and AEON is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CHIBA BANK and AEON MALL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON MALL LTD and CHIBA BANK 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 CHIBA BANK are associated (or correlated) with AEON MALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON MALL LTD has no effect on the direction of CHIBA BANK i.e., CHIBA BANK and AEON MALL go up and down completely randomly.

Pair Corralation between CHIBA BANK and AEON MALL

Assuming the 90 days trading horizon CHIBA BANK is expected to generate 1.65 times more return on investment than AEON MALL. However, CHIBA BANK is 1.65 times more volatile than AEON MALL LTD. It trades about 0.04 of its potential returns per unit of risk. AEON MALL LTD is currently generating about 0.02 per unit of risk. If you would invest  575.00  in CHIBA BANK on September 5, 2024 and sell it today you would earn a total of  240.00  from holding CHIBA BANK or generate 41.74% return on investment over 90 days.

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

CHIBA BANK  vs.  AEON MALL LTD

CHIBA BANK

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHIBA BANK are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CHIBA BANK exhibited solid returns over the last few months and may actually be approaching a breakup point.

AEON MALL LTD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AEON MALL LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AEON MALL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CHIBA BANK and AEON MALL

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

The idea behind CHIBA BANK and AEON MALL LTD 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.