Correlation Between Active Health and AVVAA World

Can any of the company-specific risk be diversified away by investing in both Active Health and AVVAA World 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 Active Health and AVVAA World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Active Health Foods and AVVAA World Health, you can compare the effects of market volatilities on Active Health and AVVAA World 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 Active Health with a short position of AVVAA World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Health and AVVAA World.

Diversification Opportunities for Active Health and AVVAA World

0.5

Correlation Coefficient

Active Health  AVVAA World

Very weak diversification

The 3 months correlation between Active and AVVAA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Active Health Foods and AVVAA World Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVVAA World Health and Active Health 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 Active Health Foods are associated (or correlated) with AVVAA World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVVAA World Health has no effect on the direction of Active Health i.e., Active Health and AVVAA World go up and down completely randomly.

Pair Corralation between Active Health and AVVAA World

Given the investment horizon of 90 days Active Health Foods is expected to under-perform the AVVAA World. In addition to that, Active Health is 1.44 times more volatile than AVVAA World Health. It trades about -0.18 of its total potential returns per unit of risk. AVVAA World Health is currently generating about 0.0 per unit of volatility. If you would invest  0.21  in AVVAA World Health on September 18, 2024 and sell it today you would lose (0.06) from holding AVVAA World Health or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Active Health Foods  vs.  AVVAA World Health

Active Health Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Active Health Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

AVVAA World Health

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days AVVAA World Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AVVAA World is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Active Health and AVVAA World

The main advantage of trading using opposite Active Health and AVVAA World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Active Health position performs unexpectedly, AVVAA World 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 AVVAA World will offset losses from the drop in AVVAA World's long position.

The idea behind Active Health Foods and AVVAA World Health 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.