Correlation Between Avante Logixx and Transat AT

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

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

Diversification Opportunities for Avante Logixx and Transat AT

0.67

Correlation Coefficient

Avante Logixx  Transat AT

Poor diversification

The 3 months correlation between Avante and Transat is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Avante Logixx and Transat AT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transat AT and Avante Logixx 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 Avante Logixx are associated (or correlated) with Transat AT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transat AT has no effect on the direction of Avante Logixx i.e., Avante Logixx and Transat AT go up and down completely randomly.

Pair Corralation between Avante Logixx and Transat AT

Given the investment horizon of 90 days Avante Logixx is expected to generate 1.49 times more return on investment than Transat AT. However, Avante Logixx is 1.49 times more volatile than Transat AT. It trades about 0.19 of its potential returns per unit of risk. Transat AT is currently generating about 0.02 per unit of risk. If you would invest  77.00  in Avante Logixx on September 24, 2024 and sell it today you would earn a total of  41.00  from holding Avante Logixx or generate 53.25% return on investment over 90 days.

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

Avante Logixx  vs.  Transat AT

Avante Logixx

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avante Logixx are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Avante Logixx showed solid returns over the last few months and may actually be approaching a breakup point.

Transat AT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transat AT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Transat AT is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Avante Logixx and Transat AT

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

The idea behind Avante Logixx and Transat AT 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.