Correlation Between AES and One Gas

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

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

Diversification Opportunities for AES and One Gas

-0.32

Correlation Coefficient

AES  One Gas

Very good diversification

The 3 months correlation between AES and One is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding The AES and One Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Gas 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 One Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Gas has no effect on the direction of AES i.e., AES and One Gas go up and down completely randomly.

Pair Corralation between AES and One Gas

Considering the 90-day investment horizon The AES is expected to generate 2.89 times more return on investment than One Gas. However, AES is 2.89 times more volatile than One Gas. It trades about 0.15 of its potential returns per unit of risk. One Gas is currently generating about -0.06 per unit of risk. If you would invest  987.00  in The AES on April 25, 2025 and sell it today you would earn a total of  393.00  from holding The AES or generate 39.82% return on investment over 90 days.

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

The AES  vs.  One Gas

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 weak technical and fundamental indicators, AES unveiled solid returns over the last few months and may actually be approaching a breakup point.

One Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, One Gas is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AES and One Gas

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

The idea behind The AES and One Gas 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 Global Correlations module to find global opportunities by holding instruments from different markets.