Correlation Between U Power and Aeon
Can any of the company-specific risk be diversified away by investing in both U Power 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 U Power and Aeon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Power Limited and Aeon Co, you can compare the effects of market volatilities on U Power 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 U Power with a short position of Aeon. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Aeon.
Diversification Opportunities for U Power and Aeon
Good diversification
The 3 months correlation between UCAR and Aeon is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Aeon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon and U Power 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 U Power Limited 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 U Power i.e., U Power and Aeon go up and down completely randomly.
Pair Corralation between U Power and Aeon
Given the investment horizon of 90 days U Power Limited is expected to under-perform the Aeon. In addition to that, U Power is 9.4 times more volatile than Aeon Co. It trades about -0.02 of its total potential returns per unit of risk. Aeon Co is currently generating about 0.5 per unit of volatility. If you would invest 2,045 in Aeon Co on September 26, 2024 and sell it today you would earn a total of 20.00 from holding Aeon Co or generate 0.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 3.2% |
Values | Daily Returns |
U Power Limited vs. Aeon Co
Performance |
Timeline |
U Power Limited |
Aeon |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
U Power and Aeon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with U Power and Aeon
The main advantage of trading using opposite U Power and Aeon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power 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.The idea behind U Power Limited 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.Aeon vs. AmTrust Financial Services | Aeon vs. Western Union Co | Aeon vs. U Power Limited | Aeon vs. Thor Industries |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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