Correlation Between Advenica and Crunchfish

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

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

Diversification Opportunities for Advenica and Crunchfish

0.72

Correlation Coefficient

Advenica  Crunchfish

Poor diversification

The 3 months correlation between Advenica and Crunchfish is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Advenica AB and Crunchfish AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crunchfish AB and Advenica 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 Advenica AB are associated (or correlated) with Crunchfish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crunchfish AB has no effect on the direction of Advenica i.e., Advenica and Crunchfish go up and down completely randomly.

Pair Corralation between Advenica and Crunchfish

Assuming the 90 days trading horizon Advenica AB is expected to generate 0.36 times more return on investment than Crunchfish. However, Advenica AB is 2.75 times less risky than Crunchfish. It trades about -0.06 of its potential returns per unit of risk. Crunchfish AB is currently generating about -0.09 per unit of risk. If you would invest  1,105  in Advenica AB on October 8, 2024 and sell it today you would lose (125.00) from holding Advenica AB or give up 11.31% of portfolio value over 90 days.

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

Advenica AB  vs.  Crunchfish AB

Advenica AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advenica AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Crunchfish AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crunchfish AB 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Advenica and Crunchfish

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

The idea behind Advenica AB and Crunchfish AB 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.