Correlation Between AEON and Moonriver

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

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

Diversification Opportunities for AEON and Moonriver

-0.27

Correlation Coefficient

AEON  Moonriver

Very good diversification

The 3 months correlation between AEON and Moonriver is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AEON and Moonriver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonriver and AEON 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 AEON are associated (or correlated) with Moonriver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonriver has no effect on the direction of AEON i.e., AEON and Moonriver go up and down completely randomly.

Pair Corralation between AEON and Moonriver

Assuming the 90 days trading horizon AEON is expected to generate 0.63 times more return on investment than Moonriver. However, AEON is 1.59 times less risky than Moonriver. It trades about -0.04 of its potential returns per unit of risk. Moonriver is currently generating about -0.28 per unit of risk. If you would invest  18.00  in AEON on January 25, 2024 and sell it today you would lose (1.00) from holding AEON or give up 5.56% of portfolio value over 90 days.

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

AEON  vs.  Moonriver

AEON

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AEON are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, AEON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Moonriver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moonriver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for Moonriver shareholders.

Pair Trading with AEON and Moonriver

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

The idea behind AEON and Moonriver 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.