Correlation Between Exor NV and Avantium Holding

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

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

Diversification Opportunities for Exor NV and Avantium Holding

0.15

Correlation Coefficient

Exor NV  Avantium Holding

Average diversification

The 3 months correlation between Exor and Avantium is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Exor NV and Avantium Holding BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantium Holding and Exor NV 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 Exor NV are associated (or correlated) with Avantium Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantium Holding has no effect on the direction of Exor NV i.e., Exor NV and Avantium Holding go up and down completely randomly.

Pair Corralation between Exor NV and Avantium Holding

Assuming the 90 days trading horizon Exor NV is expected to generate 0.55 times more return on investment than Avantium Holding. However, Exor NV is 1.8 times less risky than Avantium Holding. It trades about 0.05 of its potential returns per unit of risk. Avantium Holding BV is currently generating about -0.08 per unit of risk. If you would invest  8,805  in Exor NV on December 21, 2024 and sell it today you would earn a total of  270.00  from holding Exor NV or generate 3.07% return on investment over 90 days.

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

Exor NV  vs.  Avantium Holding BV

Exor NV

Risk-Adjusted Performance

Insignificant

Over the last 90 days Exor NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Exor NV is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Avantium Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avantium Holding BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Exor NV and Avantium Holding

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

The idea behind Exor NV and Avantium Holding BV 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.