Correlation Between Avonmore Capital and NIIT

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

Diversification Opportunities for Avonmore Capital and NIIT

0.55

Correlation Coefficient

Avonmore Capital  NIIT

Very weak diversification

The 3 months correlation between Avonmore and NIIT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Avonmore Capital Management and NIIT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIIT Limited 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 NIIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIIT Limited has no effect on the direction of Avonmore Capital i.e., Avonmore Capital and NIIT go up and down completely randomly.

Pair Corralation between Avonmore Capital and NIIT

Assuming the 90 days trading horizon Avonmore Capital Management is expected to generate 23.66 times more return on investment than NIIT. However, Avonmore Capital is 23.66 times more volatile than NIIT Limited. It trades about 0.09 of its potential returns per unit of risk. NIIT Limited is currently generating about 0.09 per unit of risk. If you would invest  807.00  in Avonmore Capital Management on September 12, 2024 and sell it today you would earn a total of  898.00  from holding Avonmore Capital Management or generate 111.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.42%
Values	Daily Returns

Avonmore Capital Management  vs.  NIIT Limited

Avonmore Capital Man

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avonmore Capital Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Avonmore Capital reported solid returns over the last few months and may actually be approaching a breakup point.

NIIT Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NIIT Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, NIIT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avonmore Capital and NIIT

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

The idea behind Avonmore Capital Management and NIIT 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 Commodity Directory module to find actively traded commodities issued by global exchanges.