Correlation Between Walmart and Aeon Co

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

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

Diversification Opportunities for Walmart and Aeon Co

-0.29

Correlation Coefficient

Walmart  Aeon Co

Very good diversification

The 3 months correlation between Walmart and Aeon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Aeon Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Co and Walmart 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 Walmart 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 Walmart i.e., Walmart and Aeon Co go up and down completely randomly.

Pair Corralation between Walmart and Aeon Co

Considering the 90-day investment horizon Walmart is expected to under-perform the Aeon Co. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 1.08 times less risky than Aeon Co. The stock trades about -0.19 of its potential returns per unit of risk. The Aeon Co Ltd is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  2,445  in Aeon Co Ltd on October 5, 2024 and sell it today you would lose (102.00) from holding Aeon Co Ltd or give up 4.17% of portfolio value over 90 days.

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

Walmart  vs.  Aeon Co Ltd

Walmart

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aeon Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeon Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Walmart and Aeon Co

The main advantage of trading using opposite Walmart and Aeon Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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 Walmart and Aeon Co Ltd 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.