Correlation Between Avonmore Capital and Coromandel International

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

By analyzing existing cross correlation between Avonmore Capital Management and Coromandel International Limited, you can compare the effects of market volatilities on Avonmore Capital and Coromandel International 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 Avonmore Capital with a short position of Coromandel International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avonmore Capital and Coromandel International.

Diversification Opportunities for Avonmore Capital and Coromandel International

0.41

Correlation Coefficient

Avonmore Capital  Coromandel International

Very weak diversification

The 3 months correlation between Avonmore and Coromandel is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Avonmore Capital Management and Coromandel International Limit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coromandel International and Avonmore Capital 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 Avonmore Capital Management are associated (or correlated) with Coromandel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coromandel International has no effect on the direction of Avonmore Capital i.e., Avonmore Capital and Coromandel International go up and down completely randomly.

Pair Corralation between Avonmore Capital and Coromandel International

Assuming the 90 days trading horizon Avonmore Capital Management is expected to generate 3.05 times more return on investment than Coromandel International. However, Avonmore Capital is 3.05 times more volatile than Coromandel International Limited. It trades about 0.21 of its potential returns per unit of risk. Coromandel International Limited is currently generating about 0.24 per unit of risk. If you would invest  1,464  in Avonmore Capital Management on October 8, 2024 and sell it today you would earn a total of  1,020  from holding Avonmore Capital Management or generate 69.67% return on investment over 90 days.

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

Avonmore Capital Management  vs.  Coromandel International Limit

Avonmore Capital Man

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avonmore Capital Management are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Avonmore Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Coromandel International

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coromandel International Limited are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Coromandel International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avonmore Capital and Coromandel International

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

The idea behind Avonmore Capital Management and Coromandel International Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.