Correlation Between EON SE and AES

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

By analyzing existing cross correlation between EON SE ADR and The AES, you can compare the effects of market volatilities on EON SE and AES 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 EON SE with a short position of AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of EON SE and AES.

Diversification Opportunities for EON SE and AES

0.0

Correlation Coefficient

EON SE  AES

Pay attention - limited upside

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

Pair Corralation between EON SE and AES

If you would invest  1,255  in The AES on December 27, 2024 and sell it today you would lose (6.00) from holding The AES or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

EON SE ADR  vs.  The AES

EON SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days EON SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, EON SE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AES

Risk-Adjusted Performance

Very Weak

Over the last 90 days The AES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, AES is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EON SE and AES

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

The idea behind EON SE ADR and The AES 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.