Correlation Between PEPKOR and Aeon
Can any of the company-specific risk be diversified away by investing in both PEPKOR and Aeon 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 PEPKOR and Aeon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PEPKOR LTD and Aeon Co, you can compare the effects of market volatilities on PEPKOR and Aeon 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 PEPKOR with a short position of Aeon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and Aeon.
Diversification Opportunities for PEPKOR and Aeon
Good diversification
The 3 months correlation between PEPKOR and Aeon is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD and Aeon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon and PEPKOR 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 PEPKOR LTD are associated (or correlated) with Aeon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon has no effect on the direction of PEPKOR i.e., PEPKOR and Aeon go up and down completely randomly.
Pair Corralation between PEPKOR and Aeon
Assuming the 90 days trading horizon PEPKOR LTD is expected to generate 5.09 times more return on investment than Aeon. However, PEPKOR is 5.09 times more volatile than Aeon Co. It trades about 0.08 of its potential returns per unit of risk. Aeon Co is currently generating about 0.03 per unit of risk. If you would invest 25.00 in PEPKOR LTD on September 23, 2024 and sell it today you would earn a total of 134.00 from holding PEPKOR LTD or generate 536.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
PEPKOR LTD vs. Aeon Co
Performance |
Timeline |
PEPKOR LTD |
Aeon |
PEPKOR and Aeon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PEPKOR and Aeon
The main advantage of trading using opposite PEPKOR and Aeon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPKOR position performs unexpectedly, Aeon 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 will offset losses from the drop in Aeon's long position.PEPKOR vs. Aeon Co | PEPKOR vs. SHOPRITE HDGS ADR | PEPKOR vs. Shoprite Holdings Limited | PEPKOR vs. Dillards |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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