Correlation Between AES and Japan 2x

Can any of the company-specific risk be diversified away by investing in both AES and Japan 2x 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 Japan 2x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The AES and Japan 2x Strategy, you can compare the effects of market volatilities on AES and Japan 2x 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 Japan 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Japan 2x.

Diversification Opportunities for AES and Japan 2x

0.62

Correlation Coefficient

AES  Japan 2x

Poor diversification

The 3 months correlation between AES and Japan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Japan 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan 2x Strategy 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 Japan 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan 2x Strategy has no effect on the direction of AES i.e., AES and Japan 2x go up and down completely randomly.

Pair Corralation between AES and Japan 2x

Considering the 90-day investment horizon The AES is expected to generate 1.37 times more return on investment than Japan 2x. However, AES is 1.37 times more volatile than Japan 2x Strategy. It trades about 0.16 of its potential returns per unit of risk. Japan 2x Strategy is currently generating about 0.11 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	100.0%
Values	Daily Returns

The AES  vs.  Japan 2x Strategy

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.

Japan 2x Strategy

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Japan 2x Strategy are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Japan 2x showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AES and Japan 2x

The main advantage of trading using opposite AES and Japan 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES position performs unexpectedly, Japan 2x 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 Japan 2x will offset losses from the drop in Japan 2x's long position.

The idea behind The AES and Japan 2x Strategy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.