Correlation Between Avient Corp and Raytech Holding

Can any of the company-specific risk be diversified away by investing in both Avient Corp and Raytech Holding 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 Avient Corp and Raytech Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avient Corp and Raytech Holding Limited, you can compare the effects of market volatilities on Avient Corp and Raytech Holding 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 Avient Corp with a short position of Raytech Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and Raytech Holding.

Diversification Opportunities for Avient Corp and Raytech Holding

-0.27

Correlation Coefficient

Avient Corp  Raytech Holding

Very good diversification

The 3 months correlation between Avient and Raytech is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Raytech Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytech Holding and Avient Corp 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 Avient Corp are associated (or correlated) with Raytech Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytech Holding has no effect on the direction of Avient Corp i.e., Avient Corp and Raytech Holding go up and down completely randomly.

Pair Corralation between Avient Corp and Raytech Holding

Given the investment horizon of 90 days Avient Corp is expected to generate 0.33 times more return on investment than Raytech Holding. However, Avient Corp is 3.0 times less risky than Raytech Holding. It trades about 0.01 of its potential returns per unit of risk. Raytech Holding Limited is currently generating about -0.02 per unit of risk. If you would invest  4,733  in Avient Corp on September 17, 2024 and sell it today you would earn a total of  19.00  from holding Avient Corp or generate 0.4% return on investment over 90 days.

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

Avient Corp  vs.  Raytech Holding Limited

Avient Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Avient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Avient Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Raytech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Raytech Holding is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avient Corp and Raytech Holding

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

The idea behind Avient Corp and Raytech Holding Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.