Correlation Between Orissa Minerals and AVALON TECHNOLOGIES

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Can any of the company-specific risk be diversified away by investing in both Orissa Minerals and AVALON TECHNOLOGIES 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 Orissa Minerals and AVALON TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Orissa Minerals and AVALON TECHNOLOGIES LTD, you can compare the effects of market volatilities on Orissa Minerals and AVALON TECHNOLOGIES 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 Orissa Minerals with a short position of AVALON TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orissa Minerals and AVALON TECHNOLOGIES.

Diversification Opportunities for Orissa Minerals and AVALON TECHNOLOGIES

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Orissa and AVALON is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Orissa Minerals and AVALON TECHNOLOGIES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVALON TECHNOLOGIES LTD and Orissa Minerals 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 The Orissa Minerals are associated (or correlated) with AVALON TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVALON TECHNOLOGIES LTD has no effect on the direction of Orissa Minerals i.e., Orissa Minerals and AVALON TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Orissa Minerals and AVALON TECHNOLOGIES

Assuming the 90 days trading horizon The Orissa Minerals is expected to generate 0.78 times more return on investment than AVALON TECHNOLOGIES. However, The Orissa Minerals is 1.28 times less risky than AVALON TECHNOLOGIES. It trades about -0.35 of its potential returns per unit of risk. AVALON TECHNOLOGIES LTD is currently generating about -0.61 per unit of risk. If you would invest  721,370  in The Orissa Minerals on October 28, 2024 and sell it today you would lose (113,215) from holding The Orissa Minerals or give up 15.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

The Orissa Minerals  vs.  AVALON TECHNOLOGIES LTD

 Performance 
       Timeline  
Orissa Minerals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Orissa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
AVALON TECHNOLOGIES LTD 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AVALON TECHNOLOGIES LTD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, AVALON TECHNOLOGIES sustained solid returns over the last few months and may actually be approaching a breakup point.

Orissa Minerals and AVALON TECHNOLOGIES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Orissa Minerals and AVALON TECHNOLOGIES

The main advantage of trading using opposite Orissa Minerals and AVALON TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orissa Minerals position performs unexpectedly, AVALON TECHNOLOGIES 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 TECHNOLOGIES will offset losses from the drop in AVALON TECHNOLOGIES's long position.
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The idea behind The Orissa Minerals and AVALON TECHNOLOGIES LTD 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.
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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