Correlation Between AVALON TECHNOLOGIES and Cantabil Retail

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

Diversification Opportunities for AVALON TECHNOLOGIES and Cantabil Retail

-0.57

Correlation Coefficient

AVALON TECHNOLOGIES  Cantabil Retail

Excellent diversification

The 3 months correlation between AVALON and Cantabil is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AVALON TECHNOLOGIES LTD and Cantabil Retail India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantabil Retail India 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 Cantabil Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantabil Retail India has no effect on the direction of AVALON TECHNOLOGIES i.e., AVALON TECHNOLOGIES and Cantabil Retail go up and down completely randomly.

Pair Corralation between AVALON TECHNOLOGIES and Cantabil Retail

Assuming the 90 days trading horizon AVALON TECHNOLOGIES is expected to generate 4.3 times less return on investment than Cantabil Retail. But when comparing it to its historical volatility, AVALON TECHNOLOGIES LTD is 7.31 times less risky than Cantabil Retail. It trades about 0.07 of its potential returns per unit of risk. Cantabil Retail India is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  20,520  in Cantabil Retail India on August 31, 2024 and sell it today you would earn a total of  2,415  from holding Cantabil Retail India or generate 11.77% return on investment over 90 days.

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

AVALON TECHNOLOGIES LTD  vs.  Cantabil Retail India

AVALON TECHNOLOGIES LTD

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVALON TECHNOLOGIES LTD are ranked lower than 19 (%) 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.

Cantabil Retail India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cantabil Retail India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with AVALON TECHNOLOGIES and Cantabil Retail

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

The idea behind AVALON TECHNOLOGIES LTD and Cantabil Retail India 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.