Correlation Between Aragon and BEZ

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

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

Diversification Opportunities for Aragon and BEZ

0.0

Correlation Coefficient

Aragon  BEZ

Pay attention - limited upside

The 3 months correlation between Aragon and BEZ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aragon and BEZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEZ and Aragon 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 Aragon are associated (or correlated) with BEZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEZ has no effect on the direction of Aragon i.e., Aragon and BEZ go up and down completely randomly.

Pair Corralation between Aragon and BEZ

Assuming the 90 days trading horizon Aragon is expected to generate 24.97 times less return on investment than BEZ. But when comparing it to its historical volatility, Aragon is 24.36 times less risky than BEZ. It trades about 0.1 of its potential returns per unit of risk. BEZ is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.41  in BEZ on January 19, 2024 and sell it today you would earn a total of  23.59  from holding BEZ or generate 5779.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	38.14%
Values	Daily Returns

Aragon  vs.  BEZ

Aragon

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aragon are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Aragon exhibited solid returns over the last few months and may actually be approaching a breakup point.

BEZ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BEZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BEZ is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aragon and BEZ

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

The idea behind Aragon and BEZ 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.