Correlation Between Avalon Holdings and OriginClear
Can any of the company-specific risk be diversified away by investing in both Avalon Holdings and OriginClear 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 OriginClear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avalon Holdings and OriginClear, you can compare the effects of market volatilities on Avalon Holdings and OriginClear 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 OriginClear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avalon Holdings and OriginClear.
Diversification Opportunities for Avalon Holdings and OriginClear
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Avalon and OriginClear is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Avalon Holdings and OriginClear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginClear 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 OriginClear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginClear has no effect on the direction of Avalon Holdings i.e., Avalon Holdings and OriginClear go up and down completely randomly.
Pair Corralation between Avalon Holdings and OriginClear
Considering the 90-day investment horizon Avalon Holdings is expected to generate 0.4 times more return on investment than OriginClear. However, Avalon Holdings is 2.51 times less risky than OriginClear. It trades about 0.1 of its potential returns per unit of risk. OriginClear is currently generating about -0.01 per unit of risk. If you would invest 227.00 in Avalon Holdings on August 25, 2024 and sell it today you would earn a total of 91.00 from holding Avalon Holdings or generate 40.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Avalon Holdings vs. OriginClear
Performance |
| Timeline |
| Avalon Holdings |
| OriginClear |
Avalon Holdings and OriginClear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avalon Holdings and OriginClear
The main advantage of trading using opposite Avalon Holdings and OriginClear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalon Holdings position performs unexpectedly, OriginClear 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 OriginClear will offset losses from the drop in OriginClear's long position.| Avalon Holdings vs. Genpact Limited | Avalon Holdings vs. Broadridge Financial Solutions | Avalon Holdings vs. First Advantage Corp | Avalon Holdings vs. Franklin Covey |
| OriginClear vs. BacTech Environmental | OriginClear vs. Agilyx AS | OriginClear vs. Avalon Holdings | OriginClear vs. Ambipar Emergency Response |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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