Correlation Between AVALON TECHNOLOGIES and S P

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

Diversification Opportunities for AVALON TECHNOLOGIES and S P

0.68

Correlation Coefficient

AVALON TECHNOLOGIES  S P

Poor diversification

The 3 months correlation between AVALON and SPAL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AVALON TECHNOLOGIES LTD and S P Apparels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S P Apparels 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 S P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S P Apparels has no effect on the direction of AVALON TECHNOLOGIES i.e., AVALON TECHNOLOGIES and S P go up and down completely randomly.

Pair Corralation between AVALON TECHNOLOGIES and S P

Assuming the 90 days trading horizon AVALON TECHNOLOGIES LTD is expected to generate 0.92 times more return on investment than S P. However, AVALON TECHNOLOGIES LTD is 1.09 times less risky than S P. It trades about -0.06 of its potential returns per unit of risk. S P Apparels is currently generating about -0.1 per unit of risk. If you would invest  94,860  in AVALON TECHNOLOGIES LTD on December 25, 2024 and sell it today you would lose (15,625) from holding AVALON TECHNOLOGIES LTD or give up 16.47% of portfolio value over 90 days.

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

AVALON TECHNOLOGIES LTD  vs.  S P Apparels

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.

S P Apparels

Risk-Adjusted Performance

Very Weak

Over the last 90 days S P Apparels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AVALON TECHNOLOGIES and S P

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

The idea behind AVALON TECHNOLOGIES LTD and S P Apparels 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.