Correlation Between Avonmore Capital and WESTLIFE FOODWORLD

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

Diversification Opportunities for Avonmore Capital and WESTLIFE FOODWORLD

0.06

Correlation Coefficient

Avonmore Capital  WESTLIFE FOODWORLD

Significant diversification

The 3 months correlation between Avonmore and WESTLIFE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Avonmore Capital Management and WESTLIFE FOODWORLD LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLIFE FOODWORLD 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 WESTLIFE FOODWORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTLIFE FOODWORLD has no effect on the direction of Avonmore Capital i.e., Avonmore Capital and WESTLIFE FOODWORLD go up and down completely randomly.

Pair Corralation between Avonmore Capital and WESTLIFE FOODWORLD

Assuming the 90 days trading horizon Avonmore Capital Management is expected to generate 2.56 times more return on investment than WESTLIFE FOODWORLD. However, Avonmore Capital is 2.56 times more volatile than WESTLIFE FOODWORLD LIMITED. It trades about 0.14 of its potential returns per unit of risk. WESTLIFE FOODWORLD LIMITED is currently generating about -0.02 per unit of risk. If you would invest  1,620  in Avonmore Capital Management on October 25, 2024 and sell it today you would earn a total of  701.00  from holding Avonmore Capital Management or generate 43.27% return on investment over 90 days.

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

Avonmore Capital Management  vs.  WESTLIFE FOODWORLD LIMITED

Avonmore Capital Man

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avonmore Capital Management are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Avonmore Capital reported solid returns over the last few months and may actually be approaching a breakup point.

WESTLIFE FOODWORLD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTLIFE FOODWORLD LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, WESTLIFE FOODWORLD is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Avonmore Capital and WESTLIFE FOODWORLD

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

The idea behind Avonmore Capital Management and WESTLIFE FOODWORLD 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.