Correlation Between AVY Precision and XAC Automation
Can any of the company-specific risk be diversified away by investing in both AVY Precision and XAC Automation 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 AVY Precision and XAC Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVY Precision Technology and XAC Automation, you can compare the effects of market volatilities on AVY Precision and XAC Automation 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 AVY Precision with a short position of XAC Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVY Precision and XAC Automation.
Diversification Opportunities for AVY Precision and XAC Automation
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AVY and XAC is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding AVY Precision Technology and XAC Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAC Automation and AVY Precision 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 AVY Precision Technology are associated (or correlated) with XAC Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAC Automation has no effect on the direction of AVY Precision i.e., AVY Precision and XAC Automation go up and down completely randomly.
Pair Corralation between AVY Precision and XAC Automation
Assuming the 90 days trading horizon AVY Precision Technology is expected to under-perform the XAC Automation. But the stock apears to be less risky and, when comparing its historical volatility, AVY Precision Technology is 1.44 times less risky than XAC Automation. The stock trades about -0.18 of its potential returns per unit of risk. The XAC Automation is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,545 in XAC Automation on September 4, 2024 and sell it today you would earn a total of 60.00 from holding XAC Automation or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVY Precision Technology vs. XAC Automation
Performance |
| Timeline |
| AVY Precision Technology |
| XAC Automation |
AVY Precision and XAC Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVY Precision and XAC Automation
The main advantage of trading using opposite AVY Precision and XAC Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVY Precision position performs unexpectedly, XAC Automation 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 XAC Automation will offset losses from the drop in XAC Automation's long position.| AVY Precision vs. Ability Enterprise Co | AVY Precision vs. XAC Automation | AVY Precision vs. Cheng Fwa Industrial | AVY Precision vs. Kaulin Mfg |
| XAC Automation vs. Taiwan Steel Union | XAC Automation vs. China Steel Corp | XAC Automation vs. Yieh United Steel | XAC Automation vs. Trade Van Information Services |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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