Correlation Between AES and Com7 PCL

Can any of the company-specific risk be diversified away by investing in both AES and Com7 PCL 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 AES and Com7 PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The AES and Com7 PCL, you can compare the effects of market volatilities on AES and Com7 PCL 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 AES with a short position of Com7 PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Com7 PCL.

Diversification Opportunities for AES and Com7 PCL

0.6

Correlation Coefficient

AES  Com7 PCL

Poor diversification

The 3 months correlation between AES and Com7 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Com7 PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Com7 PCL and AES 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 The AES are associated (or correlated) with Com7 PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Com7 PCL has no effect on the direction of AES i.e., AES and Com7 PCL go up and down completely randomly.

Pair Corralation between AES and Com7 PCL

Considering the 90-day investment horizon The AES is expected to generate 1.46 times more return on investment than Com7 PCL. However, AES is 1.46 times more volatile than Com7 PCL. It trades about 0.16 of its potential returns per unit of risk. Com7 PCL is currently generating about 0.17 per unit of risk. If you would invest  994.00  in The AES on May 26, 2025 and sell it today you would earn a total of  355.00  from holding The AES or generate 35.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

The AES  vs.  Com7 PCL

AES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, AES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Com7 PCL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Com7 PCL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Com7 PCL disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AES and Com7 PCL

The main advantage of trading using opposite AES and Com7 PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES position performs unexpectedly, Com7 PCL 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 Com7 PCL will offset losses from the drop in Com7 PCL's long position.

The idea behind The AES and Com7 PCL 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.