Correlation Between Avicanna and Body

Can any of the company-specific risk be diversified away by investing in both Avicanna and Body 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 Avicanna and Body into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avicanna and Body and Mind, you can compare the effects of market volatilities on Avicanna and Body 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 Avicanna with a short position of Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avicanna and Body.

Diversification Opportunities for Avicanna and Body

0.69

Correlation Coefficient

Avicanna  Body

Poor diversification

The 3 months correlation between Avicanna and Body is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Avicanna and Body and Mind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Body and Mind and Avicanna 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 Avicanna are associated (or correlated) with Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Body and Mind has no effect on the direction of Avicanna i.e., Avicanna and Body go up and down completely randomly.

Pair Corralation between Avicanna and Body

Assuming the 90 days horizon Avicanna is expected to generate 0.64 times more return on investment than Body. However, Avicanna is 1.57 times less risky than Body. It trades about 0.19 of its potential returns per unit of risk. Body and Mind is currently generating about -0.22 per unit of risk. If you would invest  20.00  in Avicanna on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Avicanna or generate 25.0% return on investment over 90 days.

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

Avicanna  vs.  Body and Mind

Avicanna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avicanna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Avicanna is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Body and Mind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Body and Mind has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's primary indicators remain relatively steady which may send shares a bit higher in January 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Pair Trading with Avicanna and Body

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

The idea behind Avicanna and Body and Mind 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.