Correlation Between Avanceon and Adamjee Insurance

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

By analyzing existing cross correlation between Avanceon and Adamjee Insurance, you can compare the effects of market volatilities on Avanceon and Adamjee Insurance 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 Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanceon and Adamjee Insurance.

Diversification Opportunities for Avanceon and Adamjee Insurance

0.27

Correlation Coefficient

Avanceon  Adamjee Insurance

Modest diversification

The 3 months correlation between Avanceon and Adamjee is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Avanceon and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance 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 Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Avanceon i.e., Avanceon and Adamjee Insurance go up and down completely randomly.

Pair Corralation between Avanceon and Adamjee Insurance

Assuming the 90 days trading horizon Avanceon is expected to under-perform the Adamjee Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Avanceon is 1.55 times less risky than Adamjee Insurance. The stock trades about -0.08 of its potential returns per unit of risk. The Adamjee Insurance is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,912  in Adamjee Insurance on December 25, 2024 and sell it today you would lose (229.00) from holding Adamjee Insurance or give up 4.66% of portfolio value over 90 days.

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

Avanceon  vs.  Adamjee Insurance

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Adamjee Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adamjee Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Adamjee Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avanceon and Adamjee Insurance

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

The idea behind Avanceon and Adamjee Insurance 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.