Correlation Between AXISCADES Technologies and AVALON TECHNOLOGIES

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

By analyzing existing cross correlation between AXISCADES Technologies Limited and AVALON TECHNOLOGIES LTD, you can compare the effects of market volatilities on AXISCADES Technologies and AVALON TECHNOLOGIES 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 AXISCADES Technologies with a short position of AVALON TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXISCADES Technologies and AVALON TECHNOLOGIES.

Diversification Opportunities for AXISCADES Technologies and AVALON TECHNOLOGIES

0.32

Correlation Coefficient

AXISCADES Technologies  AVALON TECHNOLOGIES

Weak diversification

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

Pair Corralation between AXISCADES Technologies and AVALON TECHNOLOGIES

Assuming the 90 days trading horizon AXISCADES Technologies is expected to generate 1.21 times less return on investment than AVALON TECHNOLOGIES. In addition to that, AXISCADES Technologies is 1.13 times more volatile than AVALON TECHNOLOGIES LTD. It trades about 0.06 of its total potential returns per unit of risk. AVALON TECHNOLOGIES LTD is currently generating about 0.09 per unit of volatility. If you would invest  39,800  in AVALON TECHNOLOGIES LTD on October 7, 2024 and sell it today you would earn a total of  57,515  from holding AVALON TECHNOLOGIES LTD or generate 144.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.12%
Values	Daily Returns

AXISCADES Technologies Limited  vs.  AVALON TECHNOLOGIES LTD

AXISCADES Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXISCADES Technologies Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, AXISCADES Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

AVALON TECHNOLOGIES LTD

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVALON TECHNOLOGIES LTD are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, AVALON TECHNOLOGIES sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXISCADES Technologies and AVALON TECHNOLOGIES

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

The idea behind AXISCADES Technologies Limited and AVALON TECHNOLOGIES LTD 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.