Correlation Between Sun Art and Aeon Co

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

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

Diversification Opportunities for Sun Art and Aeon Co

-0.01

Correlation Coefficient

Sun Art  Aeon Co

Good diversification

The 3 months correlation between Sun and Aeon is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sun Art Retail and Aeon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Co and Sun Art 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 Sun Art Retail 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 Sun Art i.e., Sun Art and Aeon Co go up and down completely randomly.

Pair Corralation between Sun Art and Aeon Co

Assuming the 90 days horizon Sun Art Retail is expected to generate 21.13 times more return on investment than Aeon Co. However, Sun Art is 21.13 times more volatile than Aeon Co. It trades about 0.2 of its potential returns per unit of risk. Aeon Co is currently generating about -0.26 per unit of risk. If you would invest  13.00  in Sun Art Retail on October 10, 2024 and sell it today you would earn a total of  9.00  from holding Sun Art Retail or generate 69.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Sun Art Retail  vs.  Aeon Co

Sun Art Retail

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Art Retail are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sun Art reported solid returns over the last few months and may actually be approaching a breakup point.

Aeon Co

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aeon Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aeon Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sun Art and Aeon Co

The main advantage of trading using opposite Sun Art and Aeon Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Art 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 Sun Art Retail and Aeon Co 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.