Correlation Between Avanceon and Soneri Bank

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

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

Diversification Opportunities for Avanceon and Soneri Bank

0.84

Correlation Coefficient

Avanceon  Soneri Bank

Very poor diversification

The 3 months correlation between Avanceon and Soneri is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Avanceon and Soneri Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soneri 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 Soneri Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soneri Bank has no effect on the direction of Avanceon i.e., Avanceon and Soneri Bank go up and down completely randomly.

Pair Corralation between Avanceon and Soneri Bank

Assuming the 90 days trading horizon Avanceon is expected to generate 1.96 times less return on investment than Soneri Bank. In addition to that, Avanceon is 1.21 times more volatile than Soneri Bank. It trades about 0.08 of its total potential returns per unit of risk. Soneri Bank is currently generating about 0.19 per unit of volatility. If you would invest  1,420  in Soneri Bank on October 11, 2024 and sell it today you would earn a total of  420.00  from holding Soneri Bank or generate 29.58% return on investment over 90 days.

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

Avanceon  vs.  Soneri Bank

Avanceon

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avanceon are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Avanceon reported solid returns over the last few months and may actually be approaching a breakup point.

Soneri Bank

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Soneri Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Soneri Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avanceon and Soneri Bank

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

The idea behind Avanceon and Soneri 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.