Correlation Between Janone and Avalon Holdings

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

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

Diversification Opportunities for Janone and Avalon Holdings

-0.73

Correlation Coefficient

Janone  Avalon Holdings

Pay attention - limited upside

The 3 months correlation between Janone and Avalon is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Janone Inc and Avalon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalon Holdings and Janone 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 Janone Inc are associated (or correlated) with Avalon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalon Holdings has no effect on the direction of Janone i.e., Janone and Avalon Holdings go up and down completely randomly.

Pair Corralation between Janone and Avalon Holdings

Considering the 90-day investment horizon Janone Inc is expected to generate 3.05 times more return on investment than Avalon Holdings. However, Janone is 3.05 times more volatile than Avalon Holdings. It trades about 0.01 of its potential returns per unit of risk. Avalon Holdings is currently generating about 0.03 per unit of risk. If you would invest  196.00  in Janone Inc on September 3, 2024 and sell it today you would lose (196.00) from holding Janone Inc or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	82.19%
Values	Daily Returns

Janone Inc  vs.  Avalon Holdings

Janone Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janone Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Janone is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Avalon Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avalon Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Avalon Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Janone and Avalon Holdings

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

The idea behind Janone Inc and Avalon Holdings 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.