Correlation Between Avanos Medical and DATANG INTL
Can any of the company-specific risk be diversified away by investing in both Avanos Medical and DATANG INTL 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 Avanos Medical and DATANG INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanos Medical and DATANG INTL POW, you can compare the effects of market volatilities on Avanos Medical and DATANG INTL 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 Avanos Medical with a short position of DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanos Medical and DATANG INTL.
Diversification Opportunities for Avanos Medical and DATANG INTL
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avanos and DATANG is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW and Avanos Medical 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 Avanos Medical are associated (or correlated) with DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of Avanos Medical i.e., Avanos Medical and DATANG INTL go up and down completely randomly.
Pair Corralation between Avanos Medical and DATANG INTL
Assuming the 90 days trading horizon Avanos Medical is expected to under-perform the DATANG INTL. In addition to that, Avanos Medical is 1.04 times more volatile than DATANG INTL POW. It trades about -0.23 of its total potential returns per unit of risk. DATANG INTL POW is currently generating about -0.07 per unit of volatility. If you would invest 18.00 in DATANG INTL POW on January 14, 2025 and sell it today you would lose (1.00) from holding DATANG INTL POW or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanos Medical vs. DATANG INTL POW
Performance |
| Timeline |
| Avanos Medical |
| DATANG INTL POW |
Avanos Medical and DATANG INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanos Medical and DATANG INTL
The main advantage of trading using opposite Avanos Medical and DATANG INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical position performs unexpectedly, DATANG INTL 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 DATANG INTL will offset losses from the drop in DATANG INTL's long position.| Avanos Medical vs. G8 EDUCATION | Avanos Medical vs. MCEWEN MINING INC | Avanos Medical vs. STRAYER EDUCATION | Avanos Medical vs. ANGLO ASIAN MINING |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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