Correlation Between Hisar Metal and AVALON TECHNOLOGIES

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

By analyzing existing cross correlation between Hisar Metal Industries and AVALON TECHNOLOGIES LTD, you can compare the effects of market volatilities on Hisar Metal and AVALON TECHNOLOGIES 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 Hisar Metal with a short position of AVALON TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisar Metal and AVALON TECHNOLOGIES.

Diversification Opportunities for Hisar Metal and AVALON TECHNOLOGIES

-0.76

Correlation Coefficient

Hisar Metal  AVALON TECHNOLOGIES

Pay attention - limited upside

The 3 months correlation between Hisar and AVALON is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and AVALON TECHNOLOGIES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVALON TECHNOLOGIES LTD and Hisar Metal 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 Hisar Metal Industries are associated (or correlated) with AVALON TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVALON TECHNOLOGIES LTD has no effect on the direction of Hisar Metal i.e., Hisar Metal and AVALON TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Hisar Metal and AVALON TECHNOLOGIES

Assuming the 90 days trading horizon Hisar Metal Industries is expected to under-perform the AVALON TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, Hisar Metal Industries is 1.88 times less risky than AVALON TECHNOLOGIES. The stock trades about -0.07 of its potential returns per unit of risk. The AVALON TECHNOLOGIES LTD is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  50,770  in AVALON TECHNOLOGIES LTD on September 2, 2024 and sell it today you would earn a total of  45,720  from holding AVALON TECHNOLOGIES LTD or generate 90.05% return on investment over 90 days.

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

Hisar Metal Industries  vs.  AVALON TECHNOLOGIES LTD

Hisar Metal Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hisar Metal Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

AVALON TECHNOLOGIES LTD

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVALON TECHNOLOGIES LTD are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, AVALON TECHNOLOGIES sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hisar Metal and AVALON TECHNOLOGIES

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

The idea behind Hisar Metal Industries and AVALON TECHNOLOGIES LTD 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.