Correlation Between AVVAA World and Ventana Biotech

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

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

Diversification Opportunities for AVVAA World and Ventana Biotech

0.32

Correlation Coefficient

AVVAA World  Ventana Biotech

Weak diversification

The 3 months correlation between AVVAA and Ventana is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding AVVAA World Health and Ventana Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventana Biotech and AVVAA World 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 AVVAA World Health are associated (or correlated) with Ventana Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventana Biotech has no effect on the direction of AVVAA World i.e., AVVAA World and Ventana Biotech go up and down completely randomly.

Pair Corralation between AVVAA World and Ventana Biotech

Given the investment horizon of 90 days AVVAA World Health is expected to under-perform the Ventana Biotech. But the pink sheet apears to be less risky and, when comparing its historical volatility, AVVAA World Health is 11.43 times less risky than Ventana Biotech. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Ventana Biotech is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.21  in Ventana Biotech on September 18, 2024 and sell it today you would lose (0.07) from holding Ventana Biotech or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

AVVAA World Health  vs.  Ventana Biotech

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.

Ventana Biotech

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ventana Biotech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ventana Biotech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVVAA World and Ventana Biotech

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

The idea behind AVVAA World Health and Ventana Biotech 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.