Correlation Between Hennessy and AOI Electronics

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

By analyzing existing cross correlation between Hennessy Bp Energy and AOI Electronics Co, you can compare the effects of market volatilities on Hennessy and AOI Electronics 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 Hennessy with a short position of AOI Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and AOI Electronics.

Diversification Opportunities for Hennessy and AOI Electronics

-0.12

Correlation Coefficient

Hennessy  AOI Electronics

Good diversification

The 3 months correlation between Hennessy and AOI is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and AOI Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOI Electronics and Hennessy 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 Hennessy Bp Energy are associated (or correlated) with AOI Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOI Electronics has no effect on the direction of Hennessy i.e., Hennessy and AOI Electronics go up and down completely randomly.

Pair Corralation between Hennessy and AOI Electronics

Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 0.13 times more return on investment than AOI Electronics. However, Hennessy Bp Energy is 7.95 times less risky than AOI Electronics. It trades about 0.02 of its potential returns per unit of risk. AOI Electronics Co is currently generating about -0.06 per unit of risk. If you would invest  2,441  in Hennessy Bp Energy on February 23, 2024 and sell it today you would earn a total of  243.00  from holding Hennessy Bp Energy or generate 9.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Hennessy Bp Energy  vs.  AOI Electronics Co

Hennessy Bp Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Hennessy showed solid returns over the last few months and may actually be approaching a breakup point.

AOI Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AOI Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hennessy and AOI Electronics

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

The idea behind Hennessy Bp Energy and AOI Electronics Co 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.

Check out your portfolio center.

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.