Correlation Between AVALON TECHNOLOGIES and Sasken Technologies

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

Diversification Opportunities for AVALON TECHNOLOGIES and Sasken Technologies

0.86

Correlation Coefficient

AVALON TECHNOLOGIES  Sasken Technologies

Very poor diversification

The 3 months correlation between AVALON and Sasken is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AVALON TECHNOLOGIES LTD and Sasken Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasken 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 Sasken Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sasken Technologies has no effect on the direction of AVALON TECHNOLOGIES i.e., AVALON TECHNOLOGIES and Sasken Technologies go up and down completely randomly.

Pair Corralation between AVALON TECHNOLOGIES and Sasken Technologies

Assuming the 90 days trading horizon AVALON TECHNOLOGIES LTD is expected to under-perform the Sasken Technologies. In addition to that, AVALON TECHNOLOGIES is 1.15 times more volatile than Sasken Technologies Limited. It trades about -0.13 of its total potential returns per unit of risk. Sasken Technologies Limited is currently generating about -0.13 per unit of volatility. If you would invest  218,970  in Sasken Technologies Limited on November 29, 2024 and sell it today you would lose (54,185) from holding Sasken Technologies Limited or give up 24.75% of portfolio value over 90 days.

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

AVALON TECHNOLOGIES LTD  vs.  Sasken Technologies Limited

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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sasken Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sasken Technologies Limited 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 forward-looking signals remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AVALON TECHNOLOGIES and Sasken Technologies

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

The idea behind AVALON TECHNOLOGIES LTD and Sasken 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.