Correlation Between Aveng and Granprade

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

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

Diversification Opportunities for Aveng and Granprade

0.85

Correlation Coefficient

Aveng  Granprade

Very poor diversification

The 3 months correlation between Aveng and Granprade is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aveng and Granprade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granprade and Aveng 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 Aveng are associated (or correlated) with Granprade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granprade has no effect on the direction of Aveng i.e., Aveng and Granprade go up and down completely randomly.

Pair Corralation between Aveng and Granprade

Assuming the 90 days trading horizon Aveng is expected to under-perform the Granprade. In addition to that, Aveng is 2.09 times more volatile than Granprade. It trades about -0.2 of its total potential returns per unit of risk. Granprade is currently generating about -0.09 per unit of volatility. If you would invest  34,000  in Granprade on December 28, 2024 and sell it today you would lose (4,100) from holding Granprade or give up 12.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Aveng  vs.  Granprade

Aveng

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aveng has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Granprade

Risk-Adjusted Performance

Very Weak

Over the last 90 days Granprade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Aveng and Granprade

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

The idea behind Aveng and Granprade 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.