Correlation Between Adval Tech and Aluflexpack

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

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

Diversification Opportunities for Adval Tech and Aluflexpack

-0.34

Correlation Coefficient

Adval Tech  Aluflexpack

Very good diversification

The 3 months correlation between Adval and Aluflexpack is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Adval Tech Holding and Aluflexpack AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluflexpack AG and Adval Tech 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 Adval Tech Holding are associated (or correlated) with Aluflexpack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluflexpack AG has no effect on the direction of Adval Tech i.e., Adval Tech and Aluflexpack go up and down completely randomly.

Pair Corralation between Adval Tech and Aluflexpack

Assuming the 90 days trading horizon Adval Tech Holding is expected to under-perform the Aluflexpack. In addition to that, Adval Tech is 3.33 times more volatile than Aluflexpack AG. It trades about -0.07 of its total potential returns per unit of risk. Aluflexpack AG is currently generating about 0.14 per unit of volatility. If you would invest  1,455  in Aluflexpack AG on December 25, 2024 and sell it today you would earn a total of  115.00  from holding Aluflexpack AG or generate 7.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.66%
Values	Daily Returns

Adval Tech Holding  vs.  Aluflexpack AG

Adval Tech Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Aluflexpack AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aluflexpack AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Aluflexpack may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Adval Tech and Aluflexpack

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

The idea behind Adval Tech Holding and Aluflexpack AG 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.