Correlation Between Aveng and Sebata Holdings

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

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

Diversification Opportunities for Aveng and Sebata Holdings

-0.46

Correlation Coefficient

Aveng  Sebata Holdings

Very good diversification

The 3 months correlation between Aveng and Sebata is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aveng and Sebata Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sebata Holdings 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 Sebata Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sebata Holdings has no effect on the direction of Aveng i.e., Aveng and Sebata Holdings go up and down completely randomly.

Pair Corralation between Aveng and Sebata Holdings

Assuming the 90 days trading horizon Aveng is expected to generate 0.51 times more return on investment than Sebata Holdings. However, Aveng is 1.96 times less risky than Sebata Holdings. It trades about 0.08 of its potential returns per unit of risk. Sebata Holdings is currently generating about -0.01 per unit of risk. If you would invest  66,400  in Aveng on September 26, 2024 and sell it today you would earn a total of  53,000  from holding Aveng or generate 79.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.68%
Values	Daily Returns

Aveng  vs.  Sebata Holdings

Aveng

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aveng are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Aveng exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sebata Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sebata Holdings 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 Sebata Holdings

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

The idea behind Aveng and Sebata Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.