Correlation Between Avi and Scepter Holdings
Can any of the company-specific risk be diversified away by investing in both Avi and Scepter 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 Avi and Scepter Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avi Ltd ADR and Scepter Holdings, you can compare the effects of market volatilities on Avi and Scepter 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 Avi with a short position of Scepter Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avi and Scepter Holdings.
Diversification Opportunities for Avi and Scepter Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Avi and Scepter is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Avi Ltd ADR and Scepter Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scepter Holdings and Avi 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 Avi Ltd ADR are associated (or correlated) with Scepter Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scepter Holdings has no effect on the direction of Avi i.e., Avi and Scepter Holdings go up and down completely randomly.
Pair Corralation between Avi and Scepter Holdings
Assuming the 90 days horizon Avi Ltd ADR is expected to under-perform the Scepter Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Avi Ltd ADR is 5.8 times less risky than Scepter Holdings. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Scepter Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 0.16 in Scepter Holdings on August 31, 2024 and sell it today you would lose (0.09) from holding Scepter Holdings or give up 56.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avi Ltd ADR vs. Scepter Holdings
Performance |
| Timeline |
| Avi Ltd ADR |
| Scepter Holdings |
Avi and Scepter Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avi and Scepter Holdings
The main advantage of trading using opposite Avi and Scepter Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avi position performs unexpectedly, Scepter 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 Scepter Holdings will offset losses from the drop in Scepter Holdings' long position.The idea behind Avi Ltd ADR and Scepter 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.| Scepter Holdings vs. The A2 Milk | Scepter Holdings vs. Altavoz Entertainment | Scepter Holdings vs. Artisan Consumer Goods | Scepter Holdings vs. General Mills |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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