Correlation Between Flex and Anavex Life
Can any of the company-specific risk be diversified away by investing in both Flex and Anavex Life 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 Flex and Anavex Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flex and Anavex Life Sciences, you can compare the effects of market volatilities on Flex and Anavex Life 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 Flex with a short position of Anavex Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flex and Anavex Life.
Diversification Opportunities for Flex and Anavex Life
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flex and Anavex is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Flex and Anavex Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anavex Life Sciences and Flex 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 Flex are associated (or correlated) with Anavex Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anavex Life Sciences has no effect on the direction of Flex i.e., Flex and Anavex Life go up and down completely randomly.
Pair Corralation between Flex and Anavex Life
Given the investment horizon of 90 days Flex is expected to generate 0.81 times more return on investment than Anavex Life. However, Flex is 1.23 times less risky than Anavex Life. It trades about 0.08 of its potential returns per unit of risk. Anavex Life Sciences is currently generating about 0.02 per unit of risk. If you would invest 1,112 in Flex on November 2, 2024 and sell it today you would earn a total of 3,096 from holding Flex or generate 278.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flex vs. Anavex Life Sciences
Performance |
| Timeline |
| Flex |
| Anavex Life Sciences |
Flex and Anavex Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flex and Anavex Life
The main advantage of trading using opposite Flex and Anavex Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex position performs unexpectedly, Anavex Life 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 Anavex Life will offset losses from the drop in Anavex Life's long position.The idea behind Flex and Anavex Life Sciences 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.| Anavex Life vs. Cassava Sciences | Anavex Life vs. INmune Bio | Anavex Life vs. Biovie Inc | Anavex Life vs. Cognition Therapeutics |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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