Correlation Between Avi and Golden Agri
Can any of the company-specific risk be diversified away by investing in both Avi and Golden Agri 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 Golden Agri 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 Golden Agri Resources, you can compare the effects of market volatilities on Avi and Golden Agri 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 Golden Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avi and Golden Agri.
Diversification Opportunities for Avi and Golden Agri
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Avi and Golden is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Avi Ltd ADR and Golden Agri Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Agri Resources 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 Golden Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Agri Resources has no effect on the direction of Avi i.e., Avi and Golden Agri go up and down completely randomly.
Pair Corralation between Avi and Golden Agri
Assuming the 90 days horizon Avi Ltd ADR is expected to generate 1.33 times more return on investment than Golden Agri. However, Avi is 1.33 times more volatile than Golden Agri Resources. It trades about 0.05 of its potential returns per unit of risk. Golden Agri Resources is currently generating about 0.04 per unit of risk. If you would invest 2,453 in Avi Ltd ADR on August 24, 2024 and sell it today you would earn a total of 871.00 from holding Avi Ltd ADR or generate 35.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.5% |
| Values | Daily Returns |
Avi Ltd ADR vs. Golden Agri Resources
Performance |
| Timeline |
| Avi Ltd ADR |
| Golden Agri Resources |
Avi and Golden Agri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avi and Golden Agri
The main advantage of trading using opposite Avi and Golden Agri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avi position performs unexpectedly, Golden Agri 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 Golden Agri will offset losses from the drop in Golden Agri's long position.The idea behind Avi Ltd ADR and Golden Agri Resources 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.| Golden Agri vs. Avi Ltd ADR | Golden Agri vs. Altavoz Entertainment | Golden Agri vs. The a2 Milk | Golden Agri vs. Aryzta AG PK |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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