Correlation Between A2 Milk and Avi

Can any of the company-specific risk be diversified away by investing in both A2 Milk and Avi 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 A2 Milk and Avi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The a2 Milk and Avi Ltd ADR, you can compare the effects of market volatilities on A2 Milk and Avi 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 A2 Milk with a short position of Avi. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2 Milk and Avi.

Diversification Opportunities for A2 Milk and Avi

-0.56

Correlation Coefficient

A2 Milk  Avi

Excellent diversification

The 3 months correlation between ACOPF and Avi is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding The a2 Milk and Avi Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avi Ltd ADR and A2 Milk 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 The a2 Milk are associated (or correlated) with Avi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avi Ltd ADR has no effect on the direction of A2 Milk i.e., A2 Milk and Avi go up and down completely randomly.

Pair Corralation between A2 Milk and Avi

If you would invest  2,810  in Avi Ltd ADR on November 20, 2024 and sell it today you would earn a total of  0.00  from holding Avi Ltd ADR or generate 0.0% return on investment over 90 days.

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

The a2 Milk  vs.  Avi Ltd ADR

a2 Milk

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The a2 Milk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, A2 Milk reported solid returns over the last few months and may actually be approaching a breakup point.

Avi Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avi Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with A2 Milk and Avi

The main advantage of trading using opposite A2 Milk and Avi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2 Milk position performs unexpectedly, Avi 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 Avi will offset losses from the drop in Avi's long position.

The idea behind The a2 Milk and Avi Ltd ADR 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.