Correlation Between Mr Price and Aveng

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

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

Diversification Opportunities for Mr Price and Aveng

0.83

Correlation Coefficient

Mr Price  Aveng

Very poor diversification

The 3 months correlation between MRP and Aveng is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Mr Price Group and Aveng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveng and Mr Price 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 Mr Price Group are associated (or correlated) with Aveng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveng has no effect on the direction of Mr Price i.e., Mr Price and Aveng go up and down completely randomly.

Pair Corralation between Mr Price and Aveng

Assuming the 90 days trading horizon Mr Price is expected to generate 43.45 times less return on investment than Aveng. In addition to that, Mr Price is 1.02 times more volatile than Aveng. It trades about 0.01 of its total potential returns per unit of risk. Aveng is currently generating about 0.37 per unit of volatility. If you would invest  117,500  in Aveng on October 10, 2024 and sell it today you would earn a total of  11,800  from holding Aveng or generate 10.04% return on investment over 90 days.

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

Mr Price Group  vs.  Aveng

Mr Price Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Price Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Mr Price exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aveng

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aveng are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Aveng exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mr Price and Aveng

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

The idea behind Mr Price Group and Aveng 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.