Correlation Between AEON METALS and Industrias Penoles

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

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

Diversification Opportunities for AEON METALS and Industrias Penoles

0.0

Correlation Coefficient

AEON METALS  Industrias Penoles

Pay attention - limited upside

The 3 months correlation between AEON and Industrias is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AEON METALS LTD and Industrias Penoles Sab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias Penoles Sab and AEON METALS 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 METALS LTD are associated (or correlated) with Industrias Penoles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrias Penoles Sab has no effect on the direction of AEON METALS i.e., AEON METALS and Industrias Penoles go up and down completely randomly.

Pair Corralation between AEON METALS and Industrias Penoles

Assuming the 90 days trading horizon AEON METALS LTD is expected to generate 38.87 times more return on investment than Industrias Penoles. However, AEON METALS is 38.87 times more volatile than Industrias Penoles Sab. It trades about 0.14 of its potential returns per unit of risk. Industrias Penoles Sab is currently generating about 0.02 per unit of risk. If you would invest  1.35  in AEON METALS LTD on October 12, 2024 and sell it today you would lose (1.30) from holding AEON METALS LTD or give up 96.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

AEON METALS LTD  vs.  Industrias Penoles Sab

AEON METALS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Industrias Penoles Sab

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Penoles Sab are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Industrias Penoles reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEON METALS and Industrias Penoles

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

The idea behind AEON METALS LTD and Industrias Penoles Sab 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.