Correlation Between Avonmore Capital and JTL Industries

Can any of the company-specific risk be diversified away by investing in both Avonmore Capital and JTL Industries 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 JTL Industries 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 JTL Industries, you can compare the effects of market volatilities on Avonmore Capital and JTL Industries 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 JTL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avonmore Capital and JTL Industries.

Diversification Opportunities for Avonmore Capital and JTL Industries

0.32

Correlation Coefficient

Avonmore Capital  JTL Industries

Weak diversification

The 3 months correlation between Avonmore and JTL is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Avonmore Capital Management and JTL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JTL Industries 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 JTL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JTL Industries has no effect on the direction of Avonmore Capital i.e., Avonmore Capital and JTL Industries go up and down completely randomly.

Pair Corralation between Avonmore Capital and JTL Industries

Assuming the 90 days trading horizon Avonmore Capital Management is expected to generate 2.32 times more return on investment than JTL Industries. However, Avonmore Capital is 2.32 times more volatile than JTL Industries. It trades about 0.25 of its potential returns per unit of risk. JTL Industries is currently generating about 0.09 per unit of risk. If you would invest  1,604  in Avonmore Capital Management on October 11, 2024 and sell it today you would earn a total of  1,120  from holding Avonmore Capital Management or generate 69.83% return on investment over 90 days.

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

Avonmore Capital Management  vs.  JTL Industries

Avonmore Capital Man

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avonmore Capital Management are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Avonmore Capital reported solid returns over the last few months and may actually be approaching a breakup point.

JTL Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JTL Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, JTL Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avonmore Capital and JTL Industries

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

The idea behind Avonmore Capital Management and JTL Industries 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.