Correlation Between Aeon and Pick N

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

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

Diversification Opportunities for Aeon and Pick N

-0.76

Correlation Coefficient

Aeon  Pick N

Pay attention - limited upside

The 3 months correlation between Aeon and Pick is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Co and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay and Aeon 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 Co are associated (or correlated) with Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of Aeon i.e., Aeon and Pick N go up and down completely randomly.

Pair Corralation between Aeon and Pick N

Assuming the 90 days trading horizon Aeon Co is expected to generate 0.48 times more return on investment than Pick N. However, Aeon Co is 2.09 times less risky than Pick N. It trades about 0.05 of its potential returns per unit of risk. Pick n Pay is currently generating about -0.04 per unit of risk. If you would invest  2,239  in Aeon Co on December 28, 2024 and sell it today you would earn a total of  81.00  from holding Aeon Co or generate 3.62% return on investment over 90 days.

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

Aeon Co  vs.  Pick n Pay

Aeon

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aeon Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aeon is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pick n Pay

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pick n Pay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Aeon and Pick N

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

The idea behind Aeon Co and Pick n Pay 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.