Correlation Between Avalon Holdings and BacTech Environmental
Can any of the company-specific risk be diversified away by investing in both Avalon Holdings and BacTech Environmental 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 Avalon Holdings and BacTech Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avalon Holdings and BacTech Environmental, you can compare the effects of market volatilities on Avalon Holdings and BacTech Environmental 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 Avalon Holdings with a short position of BacTech Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avalon Holdings and BacTech Environmental.
Diversification Opportunities for Avalon Holdings and BacTech Environmental
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avalon and BacTech is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Avalon Holdings and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental and Avalon Holdings 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 Avalon Holdings are associated (or correlated) with BacTech Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BacTech Environmental has no effect on the direction of Avalon Holdings i.e., Avalon Holdings and BacTech Environmental go up and down completely randomly.
Pair Corralation between Avalon Holdings and BacTech Environmental
Considering the 90-day investment horizon Avalon Holdings is expected to generate 0.41 times more return on investment than BacTech Environmental. However, Avalon Holdings is 2.47 times less risky than BacTech Environmental. It trades about 0.07 of its potential returns per unit of risk. BacTech Environmental is currently generating about 0.0 per unit of risk. If you would invest 205.00 in Avalon Holdings on September 1, 2024 and sell it today you would earn a total of 121.00 from holding Avalon Holdings or generate 59.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.4% |
| Values | Daily Returns |
Avalon Holdings vs. BacTech Environmental
Performance |
| Timeline |
| Avalon Holdings |
| BacTech Environmental |
Avalon Holdings and BacTech Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avalon Holdings and BacTech Environmental
The main advantage of trading using opposite Avalon Holdings and BacTech Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalon Holdings position performs unexpectedly, BacTech Environmental 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 BacTech Environmental will offset losses from the drop in BacTech Environmental's long position.| Avalon Holdings vs. CRA International | Avalon Holdings vs. ICF International | Avalon Holdings vs. Forrester Research | Avalon Holdings vs. Huron Consulting Group |
| BacTech Environmental vs. BluMetric Environmental | BacTech Environmental vs. Agilyx AS | BacTech Environmental vs. EcoPlus | BacTech Environmental vs. BQE Water |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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