Correlation Between Rotshtein and Avrot Industries

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

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

Diversification Opportunities for Rotshtein and Avrot Industries

-0.01

Correlation Coefficient

Rotshtein  Avrot Industries

Good diversification

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

Pair Corralation between Rotshtein and Avrot Industries

Assuming the 90 days trading horizon Rotshtein is expected to generate 3.94 times less return on investment than Avrot Industries. But when comparing it to its historical volatility, Rotshtein is 1.44 times less risky than Avrot Industries. It trades about 0.08 of its potential returns per unit of risk. Avrot Industries is currently generating about 0.22 of returns per unit of risk over similar time horizon. 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

Rotshtein  vs.  Avrot Industries

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.

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.

Pair Trading with Rotshtein and Avrot Industries

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

The idea behind Rotshtein and Avrot Industries 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.