Correlation Between AVALON TECHNOLOGIES and Avonmore Capital

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

By analyzing existing cross correlation between AVALON TECHNOLOGIES LTD and Avonmore Capital Management, you can compare the effects of market volatilities on AVALON TECHNOLOGIES and Avonmore Capital 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 AVALON TECHNOLOGIES with a short position of Avonmore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVALON TECHNOLOGIES and Avonmore Capital.

Diversification Opportunities for AVALON TECHNOLOGIES and Avonmore Capital

-0.05

Correlation Coefficient

AVALON TECHNOLOGIES  Avonmore Capital

Good diversification

The 3 months correlation between AVALON and Avonmore is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AVALON TECHNOLOGIES LTD and Avonmore Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avonmore Capital Man and AVALON TECHNOLOGIES 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 AVALON TECHNOLOGIES LTD are associated (or correlated) with Avonmore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avonmore Capital Man has no effect on the direction of AVALON TECHNOLOGIES i.e., AVALON TECHNOLOGIES and Avonmore Capital go up and down completely randomly.

Pair Corralation between AVALON TECHNOLOGIES and Avonmore Capital

Assuming the 90 days trading horizon AVALON TECHNOLOGIES LTD is expected to under-perform the Avonmore Capital. But the stock apears to be less risky and, when comparing its historical volatility, AVALON TECHNOLOGIES LTD is 1.37 times less risky than Avonmore Capital. The stock trades about -0.1 of its potential returns per unit of risk. The Avonmore Capital Management is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,675  in Avonmore Capital Management on December 27, 2024 and sell it today you would earn a total of  58.00  from holding Avonmore Capital Management or generate 3.46% return on investment over 90 days.

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

AVALON TECHNOLOGIES LTD  vs.  Avonmore Capital Management

AVALON TECHNOLOGIES LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days AVALON TECHNOLOGIES LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Avonmore Capital Man

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avonmore Capital Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Avonmore Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AVALON TECHNOLOGIES and Avonmore Capital

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

The idea behind AVALON TECHNOLOGIES LTD and Avonmore Capital Management 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.