Correlation Between HaiXin Foods and AVCON Information

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

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

Diversification Opportunities for HaiXin Foods and AVCON Information

0.2

Correlation Coefficient

HaiXin Foods  AVCON Information

Modest diversification

The 3 months correlation between HaiXin and AVCON is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding HaiXin Foods Co and AVCON Information Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVCON Information Tech and HaiXin Foods 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 HaiXin Foods Co are associated (or correlated) with AVCON Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVCON Information Tech has no effect on the direction of HaiXin Foods i.e., HaiXin Foods and AVCON Information go up and down completely randomly.

Pair Corralation between HaiXin Foods and AVCON Information

Assuming the 90 days trading horizon HaiXin Foods Co is expected to under-perform the AVCON Information. But the stock apears to be less risky and, when comparing its historical volatility, HaiXin Foods Co is 1.49 times less risky than AVCON Information. The stock trades about -0.04 of its potential returns per unit of risk. The AVCON Information Tech is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  432.00  in AVCON Information Tech on December 24, 2024 and sell it today you would earn a total of  49.00  from holding AVCON Information Tech or generate 11.34% return on investment over 90 days.

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

HaiXin Foods Co  vs.  AVCON Information Tech

HaiXin Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days HaiXin Foods Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AVCON Information Tech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AVCON Information Tech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AVCON Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HaiXin Foods and AVCON Information

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

The idea behind HaiXin Foods Co and AVCON Information Tech 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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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.