Correlation Between Technical Olympic and Avax SA

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

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

Diversification Opportunities for Technical Olympic and Avax SA

0.88

Correlation Coefficient

Technical Olympic  Avax SA

Very poor diversification

The 3 months correlation between Technical and Avax is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Technical Olympic SA and Avax SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avax SA and Technical Olympic 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 Technical Olympic 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 Technical Olympic i.e., Technical Olympic and Avax SA go up and down completely randomly.

Pair Corralation between Technical Olympic and Avax SA

Assuming the 90 days trading horizon Technical Olympic is expected to generate 4.77 times less return on investment than Avax SA. But when comparing it to its historical volatility, Technical Olympic SA is 2.18 times less risky than Avax SA. It trades about 0.15 of its potential returns per unit of risk. Avax SA is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  144.00  in Avax SA on December 2, 2024 and sell it today you would earn a total of  86.00  from holding Avax SA or generate 59.72% return on investment over 90 days.

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

Technical Olympic SA  vs.  Avax SA

Technical Olympic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technical Olympic SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Technical Olympic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Avax SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avax SA are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Avax SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Technical Olympic and Avax SA

The main advantage of trading using opposite Technical Olympic and Avax SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technical Olympic 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 Technical Olympic 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.