Correlation Between Astar and Ava Risk

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

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

Diversification Opportunities for Astar and Ava Risk

0.29

Correlation Coefficient

Astar  Ava Risk

Modest diversification

The 3 months correlation between Astar and Ava is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Ava Risk Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ava Risk Group and Astar 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 Astar are associated (or correlated) with Ava Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ava Risk Group has no effect on the direction of Astar i.e., Astar and Ava Risk go up and down completely randomly.

Pair Corralation between Astar and Ava Risk

Assuming the 90 days trading horizon Astar is expected to generate 1.48 times more return on investment than Ava Risk. However, Astar is 1.48 times more volatile than Ava Risk Group. It trades about 0.01 of its potential returns per unit of risk. Ava Risk Group is currently generating about -0.09 per unit of risk. If you would invest  5.65  in Astar on October 26, 2024 and sell it today you would lose (0.36) from holding Astar or give up 6.37% of portfolio value over 90 days.

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

Astar  vs.  Ava Risk Group

Astar

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ava Risk Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ava Risk Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Astar and Ava Risk

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

The idea behind Astar and Ava Risk Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.