Correlation Between AIER EYE and FUJIAN AONONG

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Can any of the company-specific risk be diversified away by investing in both AIER EYE and FUJIAN AONONG 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 AIER EYE and FUJIAN AONONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIER EYE HOSPITAL and FUJIAN AONONG BIOLOGICAL, you can compare the effects of market volatilities on AIER EYE and FUJIAN AONONG 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 AIER EYE with a short position of FUJIAN AONONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIER EYE and FUJIAN AONONG.

Diversification Opportunities for AIER EYE and FUJIAN AONONG

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between 300015 and FUJIAN is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding AIER EYE HOSPITAL and FUJIAN AONONG BIOLOGICAL TECHN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJIAN AONONG BIOLOG and AIER EYE 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 AIER EYE HOSPITAL are associated (or correlated) with FUJIAN AONONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJIAN AONONG BIOLOG has no effect on the direction of AIER EYE i.e., AIER EYE and FUJIAN AONONG go up and down completely randomly.

Pair Corralation between AIER EYE and FUJIAN AONONG

Assuming the 90 days trading horizon AIER EYE HOSPITAL is expected to generate 1.07 times more return on investment than FUJIAN AONONG. However, AIER EYE is 1.07 times more volatile than FUJIAN AONONG BIOLOGICAL. It trades about -0.01 of its potential returns per unit of risk. FUJIAN AONONG BIOLOGICAL is currently generating about -0.21 per unit of risk. If you would invest  2,872  in AIER EYE HOSPITAL on September 1, 2022 and sell it today you would lose (162.00)  from holding AIER EYE HOSPITAL or give up 5.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.92%
ValuesDaily Returns

AIER EYE HOSPITAL  vs.  FUJIAN AONONG BIOLOGICAL TECHN

 Performance (%) 
       Timeline  
AIER EYE HOSPITAL 
300015 Performance
0 of 100
Over the last 90 days AIER EYE HOSPITAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AIER EYE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

300015 Price Channel

FUJIAN AONONG BIOLOG 
FUJIAN Performance
0 of 100
Over the last 90 days FUJIAN AONONG BIOLOGICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

FUJIAN Price Channel

AIER EYE and FUJIAN AONONG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AIER EYE and FUJIAN AONONG

The main advantage of trading using opposite AIER EYE and FUJIAN AONONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIER EYE position performs unexpectedly, FUJIAN AONONG 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 FUJIAN AONONG will offset losses from the drop in FUJIAN AONONG's long position.
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The idea behind AIER EYE HOSPITAL and FUJIAN AONONG BIOLOGICAL 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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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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