Correlation Between Lanakam SA and Avax SA

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

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

Diversification Opportunities for Lanakam SA and Avax SA

0.36

Correlation Coefficient

Lanakam SA  Avax SA

Weak diversification

The 3 months correlation between Lanakam and Avax is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lanakam SA and Avax SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avax SA and Lanakam SA 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 Lanakam SA are associated (or correlated) with Avax SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avax SA has no effect on the direction of Lanakam SA i.e., Lanakam SA and Avax SA go up and down completely randomly.

Pair Corralation between Lanakam SA and Avax SA

Assuming the 90 days trading horizon Lanakam SA is expected to generate 10.66 times less return on investment than Avax SA. In addition to that, Lanakam SA is 1.18 times more volatile than Avax SA. It trades about 0.0 of its total potential returns per unit of risk. Avax SA is currently generating about 0.03 per unit of volatility. If you would invest  135.00  in Avax SA on September 14, 2024 and sell it today you would earn a total of  14.00  from holding Avax SA or generate 10.37% return on investment over 90 days.

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

Lanakam SA  vs.  Avax SA

Lanakam SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lanakam SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lanakam SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Avax SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avax SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Avax SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lanakam SA and Avax SA

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

The idea behind Lanakam SA and Avax SA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.