Correlation Between Alpha Trust and Avax SA

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

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

Diversification Opportunities for Alpha Trust and Avax SA

0.12

Correlation Coefficient

Alpha Trust  Avax SA

Average diversification

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

Pair Corralation between Alpha Trust and Avax SA

Assuming the 90 days trading horizon Alpha Trust Mutual is expected to under-perform the Avax SA. But the stock apears to be less risky and, when comparing its historical volatility, Alpha Trust Mutual is 6.56 times less risky than Avax SA. The stock trades about -0.03 of its potential returns per unit of risk. The Avax SA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  153.00  in Avax SA on December 29, 2024 and sell it today you would earn a total of  65.00  from holding Avax SA or generate 42.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Alpha Trust Mutual  vs.  Avax SA

Alpha Trust Mutual

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpha Trust Mutual has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alpha Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Avax SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avax SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Avax SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Trust and Avax SA

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

The idea behind Alpha Trust Mutual and Avax SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.