Correlation Between AVALON TECHNOLOGIES and AXISCADES Technologies

Can any of the company-specific risk be diversified away by investing in both AVALON TECHNOLOGIES and AXISCADES Technologies 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 AXISCADES Technologies 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 AXISCADES Technologies Limited, you can compare the effects of market volatilities on AVALON TECHNOLOGIES and AXISCADES Technologies 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 AXISCADES Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVALON TECHNOLOGIES and AXISCADES Technologies.

Diversification Opportunities for AVALON TECHNOLOGIES and AXISCADES Technologies

0.41

Correlation Coefficient

AVALON TECHNOLOGIES  AXISCADES Technologies

Very weak diversification

The 3 months correlation between AVALON and AXISCADES is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding AVALON TECHNOLOGIES LTD and AXISCADES Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXISCADES Technologies 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 AXISCADES Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXISCADES Technologies has no effect on the direction of AVALON TECHNOLOGIES i.e., AVALON TECHNOLOGIES and AXISCADES Technologies go up and down completely randomly.

Pair Corralation between AVALON TECHNOLOGIES and AXISCADES Technologies

Assuming the 90 days trading horizon AVALON TECHNOLOGIES LTD is expected to under-perform the AXISCADES Technologies. But the stock apears to be less risky and, when comparing its historical volatility, AVALON TECHNOLOGIES LTD is 1.08 times less risky than AXISCADES Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The AXISCADES Technologies Limited is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  45,155  in AXISCADES Technologies Limited on October 22, 2024 and sell it today you would earn a total of  29,135  from holding AXISCADES Technologies Limited or generate 64.52% return on investment over 90 days.

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

AVALON TECHNOLOGIES LTD  vs.  AXISCADES Technologies Limited

AVALON TECHNOLOGIES LTD

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AVALON TECHNOLOGIES LTD are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady essential indicators, AVALON TECHNOLOGIES sustained solid returns over the last few months and may actually be approaching a breakup point.

AXISCADES Technologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AXISCADES Technologies Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, AXISCADES Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVALON TECHNOLOGIES and AXISCADES Technologies

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

The idea behind AVALON TECHNOLOGIES LTD and AXISCADES Technologies Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.