Correlation Between Redefine Properties and Aveng

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

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

Diversification Opportunities for Redefine Properties and Aveng

-0.89

Correlation Coefficient

Redefine Properties  Aveng

Pay attention - limited upside

The 3 months correlation between Redefine and Aveng is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Redefine Properties and Aveng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveng and Redefine Properties 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 Redefine Properties 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 Redefine Properties i.e., Redefine Properties and Aveng go up and down completely randomly.

Pair Corralation between Redefine Properties and Aveng

Assuming the 90 days trading horizon Redefine Properties is expected to generate 3.22 times less return on investment than Aveng. But when comparing it to its historical volatility, Redefine Properties is 1.85 times less risky than Aveng. It trades about 0.05 of its potential returns per unit of risk. Aveng is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  70,000  in Aveng on October 5, 2024 and sell it today you would earn a total of  59,500  from holding Aveng or generate 85.0% return on investment over 90 days.

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

Redefine Properties  vs.  Aveng

Redefine Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aveng

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aveng are ranked lower than 21 (%) 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 Redefine Properties and Aveng

The main advantage of trading using opposite Redefine Properties and Aveng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redefine Properties 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 Redefine Properties 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.