Correlation Between BacTech Environmental and Avalon Holdings
Can any of the company-specific risk be diversified away by investing in both BacTech Environmental and Avalon 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 BacTech Environmental and Avalon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BacTech Environmental and Avalon Holdings, you can compare the effects of market volatilities on BacTech Environmental and Avalon 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 BacTech Environmental with a short position of Avalon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BacTech Environmental and Avalon Holdings.
Diversification Opportunities for BacTech Environmental and Avalon Holdings
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BacTech and Avalon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BacTech Environmental and Avalon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalon Holdings and BacTech Environmental 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 BacTech Environmental are associated (or correlated) with Avalon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalon Holdings has no effect on the direction of BacTech Environmental i.e., BacTech Environmental and Avalon Holdings go up and down completely randomly.
Pair Corralation between BacTech Environmental and Avalon Holdings
Assuming the 90 days horizon BacTech Environmental is expected to generate 2.76 times more return on investment than Avalon Holdings. However, BacTech Environmental is 2.76 times more volatile than Avalon Holdings. It trades about 0.02 of its potential returns per unit of risk. Avalon Holdings is currently generating about 0.03 per unit of risk. If you would invest 6.80 in BacTech Environmental on November 27, 2024 and sell it today you would lose (3.81) from holding BacTech Environmental or give up 56.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.17% |
| Values | Daily Returns |
BacTech Environmental vs. Avalon Holdings
Performance |
| Timeline |
| BacTech Environmental |
| Avalon Holdings |
BacTech Environmental and Avalon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BacTech Environmental and Avalon Holdings
The main advantage of trading using opposite BacTech Environmental and Avalon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BacTech Environmental position performs unexpectedly, Avalon 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 Avalon Holdings will offset losses from the drop in Avalon Holdings' long position.| BacTech Environmental vs. Agilyx AS | BacTech Environmental vs. EcoPlus | BacTech Environmental vs. BQE Water | BacTech Environmental vs. LiCycle Holdings Corp |
| Avalon Holdings vs. Agilyx AS | Avalon Holdings vs. BQE Water | Avalon Holdings vs. EcoPlus | Avalon Holdings vs. Anaergia |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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