Correlation Between Revolution Beauty and Aeorema Communications

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

By analyzing existing cross correlation between Revolution Beauty Group and Aeorema Communications Plc, you can compare the effects of market volatilities on Revolution Beauty and Aeorema Communications 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 Revolution Beauty with a short position of Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Revolution Beauty and Aeorema Communications.

Diversification Opportunities for Revolution Beauty and Aeorema Communications

-0.46

Correlation Coefficient

Revolution Beauty  Aeorema Communications

Very good diversification

The 3 months correlation between Revolution and Aeorema is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Beauty Group and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications and Revolution Beauty 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 Revolution Beauty Group are associated (or correlated) with Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of Revolution Beauty i.e., Revolution Beauty and Aeorema Communications go up and down completely randomly.

Pair Corralation between Revolution Beauty and Aeorema Communications

Assuming the 90 days trading horizon Revolution Beauty Group is expected to under-perform the Aeorema Communications. In addition to that, Revolution Beauty is 3.33 times more volatile than Aeorema Communications Plc. It trades about -0.07 of its total potential returns per unit of risk. Aeorema Communications Plc is currently generating about 0.16 per unit of volatility. If you would invest  4,300  in Aeorema Communications Plc on May 9, 2025 and sell it today you would earn a total of  1,300  from holding Aeorema Communications Plc or generate 30.23% return on investment over 90 days.

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

Revolution Beauty Group  vs.  Aeorema Communications Plc

Revolution Beauty

Risk-Adjusted Performance

Weakest

Over the last 90 days Revolution Beauty Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aeorema Communications

Risk-Adjusted Performance

Good

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

Pair Trading with Revolution Beauty and Aeorema Communications

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

The idea behind Revolution Beauty Group and Aeorema Communications Plc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.