Correlation Between Libstar Holdings and Avi

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Can any of the company-specific risk be diversified away by investing in both Libstar Holdings and Avi 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 Libstar Holdings and Avi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Libstar Holdings and Avi, you can compare the effects of market volatilities on Libstar Holdings and Avi 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 Libstar Holdings with a short position of Avi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Libstar Holdings and Avi.

Diversification Opportunities for Libstar Holdings and Avi

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Libstar and Avi is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Libstar Holdings and Avi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avi and Libstar Holdings 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 Libstar Holdings are associated (or correlated) with Avi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avi has no effect on the direction of Libstar Holdings i.e., Libstar Holdings and Avi go up and down completely randomly.

Pair Corralation between Libstar Holdings and Avi

Assuming the 90 days trading horizon Libstar Holdings is expected to generate 2.21 times more return on investment than Avi. However, Libstar Holdings is 2.21 times more volatile than Avi. It trades about 0.07 of its potential returns per unit of risk. Avi is currently generating about 0.11 per unit of risk. If you would invest  40,400  in Libstar Holdings on September 5, 2024 and sell it today you would earn a total of  4,100  from holding Libstar Holdings or generate 10.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Libstar Holdings  vs.  Avi

 Performance 
       Timeline  
Libstar Holdings 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Libstar Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Libstar Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Avi 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Avi are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Avi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Libstar Holdings and Avi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Libstar Holdings and Avi

The main advantage of trading using opposite Libstar Holdings and Avi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Libstar Holdings position performs unexpectedly, Avi 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 Avi will offset losses from the drop in Avi's long position.
The idea behind Libstar Holdings and Avi 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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