Correlation Between Ontology and AEON

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

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

Diversification Opportunities for Ontology and AEON

0.93

Correlation Coefficient

Ontology  AEON

Almost no diversification

The 3 months correlation between Ontology and AEON is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ontology and AEON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON and Ontology 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 Ontology are associated (or correlated) with AEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON has no effect on the direction of Ontology i.e., Ontology and AEON go up and down completely randomly.

Pair Corralation between Ontology and AEON

Assuming the 90 days trading horizon Ontology is expected to generate 1.96 times more return on investment than AEON. However, Ontology is 1.96 times more volatile than AEON. It trades about 0.0 of its potential returns per unit of risk. AEON is currently generating about -0.09 per unit of risk. If you would invest  32.00  in Ontology on January 19, 2024 and sell it today you would lose (3.00) from holding Ontology or give up 9.38% of portfolio value over 90 days.

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

Ontology  vs.  AEON

Ontology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ontology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ontology exhibited solid returns over the last few months and may actually be approaching a breakup point.

AEON

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AEON are ranked lower than 12 (%) 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.

Pair Trading with Ontology and AEON

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

The idea behind Ontology and AEON 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.