Correlation Between El Puerto and Aeon Co

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

By analyzing existing cross correlation between El Puerto de and Aeon Co Ltd, you can compare the effects of market volatilities on El Puerto and Aeon Co 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 El Puerto with a short position of Aeon Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Puerto and Aeon Co.

Diversification Opportunities for El Puerto and Aeon Co

0.68

Correlation Coefficient

El Puerto  Aeon Co

Poor diversification

The 3 months correlation between ELPQF and Aeon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding El Puerto de and Aeon Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Co and El Puerto 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 El Puerto de are associated (or correlated) with Aeon Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Co has no effect on the direction of El Puerto i.e., El Puerto and Aeon Co go up and down completely randomly.

Pair Corralation between El Puerto and Aeon Co

Assuming the 90 days horizon El Puerto is expected to generate 1.53 times less return on investment than Aeon Co. In addition to that, El Puerto is 2.21 times more volatile than Aeon Co Ltd. It trades about 0.01 of its total potential returns per unit of risk. Aeon Co Ltd is currently generating about 0.03 per unit of volatility. If you would invest  1,961  in Aeon Co Ltd on October 5, 2024 and sell it today you would earn a total of  382.00  from holding Aeon Co Ltd or generate 19.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	63.36%
Values	Daily Returns

El Puerto de  vs.  Aeon Co Ltd

El Puerto de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Puerto de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aeon Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeon Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with El Puerto and Aeon Co

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

The idea behind El Puerto de and Aeon Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.