Correlation Between Sunflag Iron and AVALON TECHNOLOGIES

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

By analyzing existing cross correlation between Sunflag Iron And and AVALON TECHNOLOGIES LTD, you can compare the effects of market volatilities on Sunflag Iron and AVALON TECHNOLOGIES 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 Sunflag Iron with a short position of AVALON TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunflag Iron and AVALON TECHNOLOGIES.

Diversification Opportunities for Sunflag Iron and AVALON TECHNOLOGIES

-0.33

Correlation Coefficient

Sunflag Iron  AVALON TECHNOLOGIES

Very good diversification

The 3 months correlation between Sunflag and AVALON is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sunflag Iron And and AVALON TECHNOLOGIES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVALON TECHNOLOGIES LTD and Sunflag Iron 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 Sunflag Iron And are associated (or correlated) with AVALON TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVALON TECHNOLOGIES LTD has no effect on the direction of Sunflag Iron i.e., Sunflag Iron and AVALON TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Sunflag Iron and AVALON TECHNOLOGIES

Assuming the 90 days trading horizon Sunflag Iron is expected to generate 14.89 times less return on investment than AVALON TECHNOLOGIES. But when comparing it to its historical volatility, Sunflag Iron And is 1.83 times less risky than AVALON TECHNOLOGIES. It trades about 0.03 of its potential returns per unit of risk. AVALON TECHNOLOGIES LTD is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  51,790  in AVALON TECHNOLOGIES LTD on September 4, 2024 and sell it today you would earn a total of  43,855  from holding AVALON TECHNOLOGIES LTD or generate 84.68% return on investment over 90 days.

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

Sunflag Iron And  vs.  AVALON TECHNOLOGIES LTD

Sunflag Iron And

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sunflag Iron And are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Sunflag Iron is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AVALON TECHNOLOGIES LTD

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVALON TECHNOLOGIES LTD are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile essential indicators, AVALON TECHNOLOGIES sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunflag Iron and AVALON TECHNOLOGIES

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

The idea behind Sunflag Iron And and AVALON TECHNOLOGIES LTD 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.