Correlation Between Bestway Cement and Avanceon

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

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

Diversification Opportunities for Bestway Cement and Avanceon

-0.42

Correlation Coefficient

Bestway Cement  Avanceon

Very good diversification

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

Pair Corralation between Bestway Cement and Avanceon

Assuming the 90 days trading horizon Bestway Cement is expected to generate 0.91 times more return on investment than Avanceon. However, Bestway Cement is 1.1 times less risky than Avanceon. It trades about 0.16 of its potential returns per unit of risk. Avanceon is currently generating about -0.06 per unit of risk. If you would invest  33,477  in Bestway Cement on December 24, 2024 and sell it today you would earn a total of  4,583  from holding Bestway Cement or generate 13.69% return on investment over 90 days.

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

Bestway Cement  vs.  Avanceon

Bestway Cement

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bestway Cement are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bestway Cement sustained solid returns over the last few months and may actually be approaching a breakup point.

Avanceon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avanceon has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Avanceon is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bestway Cement and Avanceon

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

The idea behind Bestway Cement and Avanceon 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..