Correlation Between AVALON TECHNOLOGIES and Niraj Ispat

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

Diversification Opportunities for AVALON TECHNOLOGIES and Niraj Ispat

-0.6

Correlation Coefficient

AVALON TECHNOLOGIES  Niraj Ispat

Excellent diversification

The 3 months correlation between AVALON and Niraj is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding AVALON TECHNOLOGIES LTD and Niraj Ispat Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niraj Ispat Industries 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 Niraj Ispat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niraj Ispat Industries has no effect on the direction of AVALON TECHNOLOGIES i.e., AVALON TECHNOLOGIES and Niraj Ispat go up and down completely randomly.

Pair Corralation between AVALON TECHNOLOGIES and Niraj Ispat

Assuming the 90 days trading horizon AVALON TECHNOLOGIES LTD is expected to under-perform the Niraj Ispat. In addition to that, AVALON TECHNOLOGIES is 4.07 times more volatile than Niraj Ispat Industries. It trades about -0.08 of its total potential returns per unit of risk. Niraj Ispat Industries is currently generating about 0.16 per unit of volatility. If you would invest  24,518  in Niraj Ispat Industries on December 25, 2024 and sell it today you would earn a total of  2,198  from holding Niraj Ispat Industries or generate 8.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

AVALON TECHNOLOGIES LTD  vs.  Niraj Ispat Industries

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 uncertain 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.

Niraj Ispat Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Niraj Ispat Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Niraj Ispat may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AVALON TECHNOLOGIES and Niraj Ispat

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

The idea behind AVALON TECHNOLOGIES LTD and Niraj Ispat Industries 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.