Correlation Between Avanceon and Allied Bank

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

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

Diversification Opportunities for Avanceon and Allied Bank

-0.1

Correlation Coefficient

Avanceon  Allied Bank

Good diversification

The 3 months correlation between Avanceon and Allied is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Avanceon and Allied Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Bank and Avanceon 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 Avanceon are associated (or correlated) with Allied Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Bank has no effect on the direction of Avanceon i.e., Avanceon and Allied Bank go up and down completely randomly.

Pair Corralation between Avanceon and Allied Bank

Assuming the 90 days trading horizon Avanceon is expected to under-perform the Allied Bank. But the stock apears to be less risky and, when comparing its historical volatility, Avanceon is 1.25 times less risky than Allied Bank. The stock trades about -0.06 of its potential returns per unit of risk. The Allied Bank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12,823  in Allied Bank on December 24, 2024 and sell it today you would earn a total of  667.00  from holding Allied Bank or generate 5.2% return on investment over 90 days.

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

Avanceon  vs.  Allied Bank

Avanceon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avanceon has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Avanceon is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Allied Bank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Allied Bank is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Avanceon and Allied Bank

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

The idea behind Avanceon and Allied Bank 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.