Correlation Between Aeon Co and Sun Art

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

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

Diversification Opportunities for Aeon Co and Sun Art

-0.73

Correlation Coefficient

Aeon Co  Sun Art

Pay attention - limited upside

The 3 months correlation between Aeon and Sun is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Co Ltd and Sun Art Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Art Retail and Aeon Co 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 Ltd are associated (or correlated) with Sun Art. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Art Retail has no effect on the direction of Aeon Co i.e., Aeon Co and Sun Art go up and down completely randomly.

Pair Corralation between Aeon Co and Sun Art

Assuming the 90 days horizon Aeon Co Ltd is expected to under-perform the Sun Art. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aeon Co Ltd is 1.29 times less risky than Sun Art. The pink sheet trades about -0.37 of its potential returns per unit of risk. The Sun Art Retail is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  188.00  in Sun Art Retail on January 30, 2024 and sell it today you would earn a total of  2.00  from holding Sun Art Retail or generate 1.06% return on investment over 90 days.

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

Aeon Co Ltd  vs.  Sun Art Retail

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 uncertain 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.

Sun Art Retail

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Art Retail are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sun Art showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeon Co and Sun Art

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

The idea behind Aeon Co Ltd and Sun Art Retail 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 Stocks Directory module to find actively traded stocks across global markets.