Correlation Between VCI Global and Avalon Holdings

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

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

Diversification Opportunities for VCI Global and Avalon Holdings

0.65

Correlation Coefficient

VCI Global  Avalon Holdings

Poor diversification

The 3 months correlation between VCI and Avalon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and Avalon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalon Holdings and VCI Global 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 VCI Global Limited are associated (or correlated) with Avalon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalon Holdings has no effect on the direction of VCI Global i.e., VCI Global and Avalon Holdings go up and down completely randomly.

Pair Corralation between VCI Global and Avalon Holdings

Given the investment horizon of 90 days VCI Global Limited is expected to under-perform the Avalon Holdings. In addition to that, VCI Global is 2.15 times more volatile than Avalon Holdings. It trades about -0.18 of its total potential returns per unit of risk. Avalon Holdings is currently generating about -0.04 per unit of volatility. If you would invest  335.00  in Avalon Holdings on December 26, 2024 and sell it today you would lose (43.51) from holding Avalon Holdings or give up 12.99% of portfolio value over 90 days.

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

VCI Global Limited  vs.  Avalon Holdings

VCI Global Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days VCI Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Avalon Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avalon Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with VCI Global and Avalon Holdings

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

The idea behind VCI Global Limited and Avalon Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.