Correlation Between Aeon Ventures and Freedom Bank

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

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

Diversification Opportunities for Aeon Ventures and Freedom Bank

-0.5

Correlation Coefficient

Aeon Ventures  Freedom Bank

Very good diversification

The 3 months correlation between Aeon and Freedom is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Ventures and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and Aeon Ventures 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 Ventures are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Aeon Ventures i.e., Aeon Ventures and Freedom Bank go up and down completely randomly.

Pair Corralation between Aeon Ventures and Freedom Bank

Given the investment horizon of 90 days Aeon Ventures is expected to generate 24.71 times more return on investment than Freedom Bank. However, Aeon Ventures is 24.71 times more volatile than Freedom Bank of. It trades about 0.07 of its potential returns per unit of risk. Freedom Bank of is currently generating about -0.27 per unit of risk. If you would invest  1.45  in Aeon Ventures on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Aeon Ventures or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Aeon Ventures  vs.  Freedom Bank of

Aeon Ventures

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aeon Ventures are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Aeon Ventures sustained solid returns over the last few months and may actually be approaching a breakup point.

Freedom Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freedom Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aeon Ventures and Freedom Bank

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

The idea behind Aeon Ventures and Freedom Bank of 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.