Correlation Between StateHouse Holdings and Avicanna

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

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

Diversification Opportunities for StateHouse Holdings and Avicanna

0.4

Correlation Coefficient

StateHouse Holdings  Avicanna

Very weak diversification

The 3 months correlation between StateHouse and Avicanna is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding StateHouse Holdings and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and StateHouse Holdings 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 StateHouse Holdings are associated (or correlated) with Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of StateHouse Holdings i.e., StateHouse Holdings and Avicanna go up and down completely randomly.

Pair Corralation between StateHouse Holdings and Avicanna

Assuming the 90 days horizon StateHouse Holdings is expected to generate 5.19 times less return on investment than Avicanna. In addition to that, StateHouse Holdings is 1.09 times more volatile than Avicanna. It trades about 0.01 of its total potential returns per unit of risk. Avicanna is currently generating about 0.04 per unit of volatility. If you would invest  27.00  in Avicanna on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Avicanna or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

StateHouse Holdings  vs.  Avicanna

StateHouse Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StateHouse Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, StateHouse Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Avicanna

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avicanna are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Avicanna reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with StateHouse Holdings and Avicanna

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

The idea behind StateHouse Holdings and Avicanna 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 Stocks Directory module to find actively traded stocks across global markets.