Correlation Between Avanceon and Premier Insurance

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

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

Diversification Opportunities for Avanceon and Premier Insurance

0.48

Correlation Coefficient

Avanceon  Premier Insurance

Very weak diversification

The 3 months correlation between Avanceon and Premier is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Avanceon and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier 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 Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of Avanceon i.e., Avanceon and Premier Insurance go up and down completely randomly.

Pair Corralation between Avanceon and Premier Insurance

Assuming the 90 days trading horizon Avanceon is expected to under-perform the Premier Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Avanceon is 2.26 times less risky than Premier Insurance. The stock trades about -0.06 of its potential returns per unit of risk. The Premier Insurance is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  573.00  in Premier Insurance on December 24, 2024 and sell it today you would lose (23.00) from holding Premier Insurance or give up 4.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.48%
Values	Daily Returns

Avanceon  vs.  Premier 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 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.

Premier Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premier Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Premier 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 Premier Insurance

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

The idea behind Avanceon and Premier 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.