Correlation Between De Grey and Avenira

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

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

Diversification Opportunities for De Grey and Avenira

-0.29

Correlation Coefficient

De Grey  Avenira

Very good diversification

The 3 months correlation between DEG and Avenira is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Avenira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avenira and De Grey 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 De Grey Mining are associated (or correlated) with Avenira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avenira has no effect on the direction of De Grey i.e., De Grey and Avenira go up and down completely randomly.

Pair Corralation between De Grey and Avenira

Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.25 times more return on investment than Avenira. However, De Grey Mining is 4.04 times less risky than Avenira. It trades about 0.2 of its potential returns per unit of risk. Avenira is currently generating about 0.05 per unit of risk. If you would invest  174.00  in De Grey Mining on December 20, 2024 and sell it today you would earn a total of  40.00  from holding De Grey Mining or generate 22.99% return on investment over 90 days.

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

De Grey Mining  vs.  Avenira

De Grey Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Avenira

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avenira are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Avenira unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with De Grey and Avenira

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

The idea behind De Grey Mining and Avenira 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.