Correlation Between Avarone Metals and Gratomic

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

By analyzing existing cross correlation between Avarone Metals and Gratomic, you can compare the effects of market volatilities on Avarone Metals and Gratomic 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 Avarone Metals with a short position of Gratomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avarone Metals and Gratomic.

Diversification Opportunities for Avarone Metals and Gratomic

0.42

Correlation Coefficient

Avarone Metals  Gratomic

Very weak diversification

The 3 months correlation between Avarone and Gratomic is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Avarone Metals and Gratomic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gratomic and Avarone Metals 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 Avarone Metals are associated (or correlated) with Gratomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gratomic has no effect on the direction of Avarone Metals i.e., Avarone Metals and Gratomic go up and down completely randomly.

Pair Corralation between Avarone Metals and Gratomic

Assuming the 90 days horizon Avarone Metals is expected to under-perform the Gratomic. In addition to that, Avarone Metals is 1.2 times more volatile than Gratomic. It trades about -0.13 of its total potential returns per unit of risk. Gratomic is currently generating about -0.04 per unit of volatility. If you would invest  5.45  in Gratomic on September 5, 2024 and sell it today you would lose (1.92) from holding Gratomic or give up 35.23% of portfolio value over 90 days.

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

Avarone Metals  vs.  Gratomic

Avarone Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avarone Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gratomic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gratomic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Avarone Metals and Gratomic

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

The idea behind Avarone Metals and Gratomic 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.