Correlation Between Avrot Industries and Rotshtein

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

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

Diversification Opportunities for Avrot Industries and Rotshtein

-0.01

Correlation Coefficient

Avrot Industries  Rotshtein

Good diversification

The 3 months correlation between Avrot and Rotshtein is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Avrot Industries and Rotshtein in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rotshtein and Avrot Industries 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 Avrot Industries are associated (or correlated) with Rotshtein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rotshtein has no effect on the direction of Avrot Industries i.e., Avrot Industries and Rotshtein go up and down completely randomly.

Pair Corralation between Avrot Industries and Rotshtein

Assuming the 90 days trading horizon Avrot Industries is expected to generate 1.44 times more return on investment than Rotshtein. However, Avrot Industries is 1.44 times more volatile than Rotshtein. It trades about 0.22 of its potential returns per unit of risk. Rotshtein is currently generating about 0.08 per unit of risk. If you would invest  4,660  in Avrot Industries on September 28, 2024 and sell it today you would earn a total of  640.00  from holding Avrot Industries or generate 13.73% return on investment over 90 days.

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

Avrot Industries  vs.  Rotshtein

Avrot Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avrot Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Avrot Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rotshtein

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rotshtein are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rotshtein sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avrot Industries and Rotshtein

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

The idea behind Avrot Industries and Rotshtein 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.