Correlation Between Avis Budget and Golden Heaven

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

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

Diversification Opportunities for Avis Budget and Golden Heaven

0.23

Correlation Coefficient

Avis Budget  Golden Heaven

Modest diversification

The 3 months correlation between Avis and Golden is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group and Avis Budget 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 Avis Budget Group are associated (or correlated) with Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of Avis Budget i.e., Avis Budget and Golden Heaven go up and down completely randomly.

Pair Corralation between Avis Budget and Golden Heaven

Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Golden Heaven. But the stock apears to be less risky and, when comparing its historical volatility, Avis Budget Group is 3.93 times less risky than Golden Heaven. The stock trades about -0.11 of its potential returns per unit of risk. The Golden Heaven Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  204.00  in Golden Heaven Group on December 26, 2024 and sell it today you would earn a total of  177.00  from holding Golden Heaven Group or generate 86.76% return on investment over 90 days.

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

Avis Budget Group  vs.  Golden Heaven Group

Avis Budget Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avis Budget Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Golden Heaven Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Heaven Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, Golden Heaven reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avis Budget and Golden Heaven

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

The idea behind Avis Budget Group and Golden Heaven Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.