Correlation Between Avonmore Capital and Styrenix Performance

Can any of the company-specific risk be diversified away by investing in both Avonmore Capital and Styrenix Performance 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 Avonmore Capital and Styrenix Performance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avonmore Capital Management and Styrenix Performance Materials, you can compare the effects of market volatilities on Avonmore Capital and Styrenix Performance 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 Avonmore Capital with a short position of Styrenix Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avonmore Capital and Styrenix Performance.

Diversification Opportunities for Avonmore Capital and Styrenix Performance

0.02

Correlation Coefficient

Avonmore Capital  Styrenix Performance

Significant diversification

The 3 months correlation between Avonmore and Styrenix is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Avonmore Capital Management and Styrenix Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Styrenix Performance and Avonmore Capital 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 Avonmore Capital Management are associated (or correlated) with Styrenix Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Styrenix Performance has no effect on the direction of Avonmore Capital i.e., Avonmore Capital and Styrenix Performance go up and down completely randomly.

Pair Corralation between Avonmore Capital and Styrenix Performance

Assuming the 90 days trading horizon Avonmore Capital Management is expected to under-perform the Styrenix Performance. In addition to that, Avonmore Capital is 1.41 times more volatile than Styrenix Performance Materials. It trades about -0.04 of its total potential returns per unit of risk. Styrenix Performance Materials is currently generating about 0.17 per unit of volatility. If you would invest  238,640  in Styrenix Performance Materials on September 18, 2024 and sell it today you would earn a total of  60,675  from holding Styrenix Performance Materials or generate 25.43% return on investment over 90 days.

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

Avonmore Capital Management  vs.  Styrenix Performance Materials

Avonmore Capital Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avonmore Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Styrenix Performance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Styrenix Performance Materials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Styrenix Performance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avonmore Capital and Styrenix Performance

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

The idea behind Avonmore Capital Management and Styrenix Performance Materials 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.