Correlation Between Avenira and Hawsons Iron

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

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

Diversification Opportunities for Avenira and Hawsons Iron

0.25

Correlation Coefficient

Avenira  Hawsons Iron

Modest diversification

The 3 months correlation between Avenira and Hawsons is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Avenira and Hawsons Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawsons Iron and Avenira 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 Avenira are associated (or correlated) with Hawsons Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawsons Iron has no effect on the direction of Avenira i.e., Avenira and Hawsons Iron go up and down completely randomly.

Pair Corralation between Avenira and Hawsons Iron

Assuming the 90 days trading horizon Avenira is expected to generate 1.34 times more return on investment than Hawsons Iron. However, Avenira is 1.34 times more volatile than Hawsons Iron. It trades about 0.07 of its potential returns per unit of risk. Hawsons Iron is currently generating about -0.03 per unit of risk. If you would invest  0.85  in Avenira on December 21, 2024 and sell it today you would earn a total of  0.15  from holding Avenira or generate 17.65% return on investment over 90 days.

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

Avenira  vs.  Hawsons Iron

Avenira

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avenira are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Avenira unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hawsons Iron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hawsons Iron 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.

Pair Trading with Avenira and Hawsons Iron

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

The idea behind Avenira and Hawsons Iron 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.