Correlation Between Calavo Growers and AiXin Life

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

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

Diversification Opportunities for Calavo Growers and AiXin Life

0.22

Correlation Coefficient

Calavo Growers  AiXin Life

Modest diversification

The 3 months correlation between Calavo and AiXin is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers and AiXin Life International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiXin Life International and Calavo Growers 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 Calavo Growers are associated (or correlated) with AiXin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiXin Life International has no effect on the direction of Calavo Growers i.e., Calavo Growers and AiXin Life go up and down completely randomly.

Pair Corralation between Calavo Growers and AiXin Life

Given the investment horizon of 90 days Calavo Growers is expected to generate 43.6 times less return on investment than AiXin Life. But when comparing it to its historical volatility, Calavo Growers is 55.18 times less risky than AiXin Life. It trades about 0.14 of its potential returns per unit of risk. AiXin Life International is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  27.00  in AiXin Life International on August 30, 2024 and sell it today you would earn a total of  23.00  from holding AiXin Life International or generate 85.19% return on investment over 90 days.

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

Calavo Growers  vs.  AiXin Life International

Calavo Growers

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calavo Growers are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Calavo Growers showed solid returns over the last few months and may actually be approaching a breakup point.

AiXin Life International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AiXin Life International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AiXin Life displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calavo Growers and AiXin Life

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

The idea behind Calavo Growers and AiXin Life International 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.