Correlation Between Avis Budget and Wang Lee

Can any of the company-specific risk be diversified away by investing in both Avis Budget and Wang Lee 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 Wang Lee 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 Wang Lee Group,, you can compare the effects of market volatilities on Avis Budget and Wang Lee 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 Wang Lee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Wang Lee.

Diversification Opportunities for Avis Budget and Wang Lee

0.84

Correlation Coefficient

Avis Budget  Wang Lee

Very poor diversification

The 3 months correlation between Avis and Wang is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Wang Lee Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wang Lee 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 Wang Lee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wang Lee Group, has no effect on the direction of Avis Budget i.e., Avis Budget and Wang Lee go up and down completely randomly.

Pair Corralation between Avis Budget and Wang Lee

Considering the 90-day investment horizon Avis Budget Group is expected to generate 0.21 times more return on investment than Wang Lee. However, Avis Budget Group is 4.76 times less risky than Wang Lee. It trades about -0.36 of its potential returns per unit of risk. Wang Lee Group, is currently generating about -0.25 per unit of risk. If you would invest  10,021  in Avis Budget Group on October 9, 2024 and sell it today you would lose (1,548) from holding Avis Budget Group or give up 15.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Avis Budget Group  vs.  Wang Lee Group,

Avis Budget Group

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, Avis Budget is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Wang Lee Group,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Wang Lee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avis Budget and Wang Lee

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

The idea behind Avis Budget Group and Wang Lee 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 Transaction History module to view history of all your transactions and understand their impact on performance.