Correlation Between Chia and Avantor
Can any of the company-specific risk be diversified away by investing in both Chia and Avantor 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 Chia and Avantor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and Avantor, you can compare the effects of market volatilities on Chia and Avantor 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 Chia with a short position of Avantor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and Avantor.
Diversification Opportunities for Chia and Avantor
Excellent diversification
The 3 months correlation between Chia and Avantor is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Avantor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantor and Chia 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 Chia are associated (or correlated) with Avantor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantor has no effect on the direction of Chia i.e., Chia and Avantor go up and down completely randomly.
Pair Corralation between Chia and Avantor
Assuming the 90 days trading horizon Chia is expected to generate 7.63 times more return on investment than Avantor. However, Chia is 7.63 times more volatile than Avantor. It trades about 0.15 of its potential returns per unit of risk. Avantor is currently generating about 0.19 per unit of risk. If you would invest 1,454 in Chia on October 20, 2024 and sell it today you would earn a total of 931.00 from holding Chia or generate 64.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.18% |
| Values | Daily Returns |
Chia vs. Avantor
Performance |
| Timeline |
| Chia |
| Avantor |
Chia and Avantor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and Avantor
The main advantage of trading using opposite Chia and Avantor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia position performs unexpectedly, Avantor 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 Avantor will offset losses from the drop in Avantor's long position.The idea behind Chia and Avantor 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.| Avantor vs. Ashland Global Holdings | Avantor vs. H B Fuller | Avantor vs. Element Solutions | Avantor vs. Balchem |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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