Correlation Between Aveng and Sygnia

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

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

Diversification Opportunities for Aveng and Sygnia

0.12

Correlation Coefficient

Aveng  Sygnia

Average diversification

The 3 months correlation between Aveng and Sygnia is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aveng and Sygnia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sygnia 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 Sygnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sygnia has no effect on the direction of Aveng i.e., Aveng and Sygnia go up and down completely randomly.

Pair Corralation between Aveng and Sygnia

Assuming the 90 days trading horizon Aveng is expected to generate 1.38 times more return on investment than Sygnia. However, Aveng is 1.38 times more volatile than Sygnia. It trades about 0.15 of its potential returns per unit of risk. Sygnia is currently generating about 0.05 per unit of risk. If you would invest  62,400  in Aveng on September 24, 2024 and sell it today you would earn a total of  53,400  from holding Aveng or generate 85.58% return on investment over 90 days.

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

Aveng  vs.  Sygnia

Aveng

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aveng are ranked lower than 13 (%) 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.

Sygnia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sygnia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sygnia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aveng and Sygnia

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

The idea behind Aveng and Sygnia 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.