Correlation Between AvePoint and Latch
Can any of the company-specific risk be diversified away by investing in both AvePoint and Latch 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 AvePoint and Latch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AvePoint and Latch Inc, you can compare the effects of market volatilities on AvePoint and Latch 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 AvePoint with a short position of Latch. Check out your portfolio center. Please also check ongoing floating volatility patterns of AvePoint and Latch.
Diversification Opportunities for AvePoint and Latch
Very poor diversification
The 3 months correlation between AvePoint and Latch is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AvePoint and Latch Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latch Inc and AvePoint 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 AvePoint are associated (or correlated) with Latch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latch Inc has no effect on the direction of AvePoint i.e., AvePoint and Latch go up and down completely randomly.
Pair Corralation between AvePoint and Latch
Assuming the 90 days horizon AvePoint is expected to generate 3.84 times less return on investment than Latch. But when comparing it to its historical volatility, AvePoint is 3.31 times less risky than Latch. It trades about 0.1 of its potential returns per unit of risk. Latch Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Latch Inc on August 30, 2024 and sell it today you would earn a total of 8.00 from holding Latch Inc or generate 88.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.69% |
| Values | Daily Returns |
AvePoint vs. Latch Inc
Performance |
| Timeline |
| AvePoint |
| Latch Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AvePoint and Latch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AvePoint and Latch
The main advantage of trading using opposite AvePoint and Latch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AvePoint position performs unexpectedly, Latch 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 Latch will offset losses from the drop in Latch's long position.The idea behind AvePoint and Latch Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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