Correlation Between AES and Diamond Estates

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

By analyzing existing cross correlation between The AES and Diamond Estates Wines, you can compare the effects of market volatilities on AES and Diamond Estates 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 Diamond Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Diamond Estates.

Diversification Opportunities for AES and Diamond Estates

-0.29

Correlation Coefficient

AES  Diamond Estates

Very good diversification

The 3 months correlation between AES and Diamond is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Diamond Estates Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Estates Wines 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 Diamond Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Estates Wines has no effect on the direction of AES i.e., AES and Diamond Estates go up and down completely randomly.

Pair Corralation between AES and Diamond Estates

Considering the 90-day investment horizon The AES is expected to generate 0.36 times more return on investment than Diamond Estates. However, The AES is 2.75 times less risky than Diamond Estates. It trades about 0.05 of its potential returns per unit of risk. Diamond Estates Wines is currently generating about -0.11 per unit of risk. If you would invest  1,153  in The AES on July 2, 2025 and sell it today you would earn a total of  163.00  from holding The AES or generate 14.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.64%
Values	Daily Returns

The AES  vs.  Diamond Estates Wines

AES

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 7 (%) 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.

Diamond Estates Wines

Risk-Adjusted Performance

Weakest

Over the last 90 days Diamond Estates Wines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in October 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AES and Diamond Estates

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

The idea behind The AES and Diamond Estates Wines 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.