Correlation Between Calavo Growers and AiXin Life

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

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

Diversification Opportunities for Calavo Growers and AiXin Life

0.12

Correlation Coefficient

Calavo Growers  AiXin Life

Average diversification

The 3 months correlation between Calavo and AiXin is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers and AiXin Life International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiXin Life International and Calavo Growers 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 Calavo Growers are associated (or correlated) with AiXin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiXin Life International has no effect on the direction of Calavo Growers i.e., Calavo Growers and AiXin Life go up and down completely randomly.

Pair Corralation between Calavo Growers and AiXin Life

Given the investment horizon of 90 days Calavo Growers is expected to under-perform the AiXin Life. But the stock apears to be less risky and, when comparing its historical volatility, Calavo Growers is 80.23 times less risky than AiXin Life. The stock trades about -0.06 of its potential returns per unit of risk. The AiXin Life International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  27.00  in AiXin Life International on September 13, 2024 and sell it today you would lose (25.30) from holding AiXin Life International or give up 93.7% of portfolio value over 90 days.

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

Calavo Growers  vs.  AiXin Life International

Calavo Growers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calavo Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Calavo Growers is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AiXin Life International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AiXin Life International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AiXin Life displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calavo Growers and AiXin Life

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

The idea behind Calavo Growers and AiXin Life International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.