Correlation Between Valeura Energy and Avante Logixx

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

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

Diversification Opportunities for Valeura Energy and Avante Logixx

0.76

Correlation Coefficient

Valeura Energy  Avante Logixx

Poor diversification

The 3 months correlation between Valeura and Avante is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Avante Logixx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avante Logixx and Valeura Energy 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 Valeura Energy are associated (or correlated) with Avante Logixx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avante Logixx has no effect on the direction of Valeura Energy i.e., Valeura Energy and Avante Logixx go up and down completely randomly.

Pair Corralation between Valeura Energy and Avante Logixx

Assuming the 90 days trading horizon Valeura Energy is expected to generate 1.22 times less return on investment than Avante Logixx. In addition to that, Valeura Energy is 1.03 times more volatile than Avante Logixx. It trades about 0.16 of its total potential returns per unit of risk. Avante Logixx is currently generating about 0.2 per unit of volatility. If you would invest  75.00  in Avante Logixx on September 22, 2024 and sell it today you would earn a total of  42.00  from holding Avante Logixx or generate 56.0% return on investment over 90 days.

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

Valeura Energy  vs.  Avante Logixx

Valeura Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Valeura Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Avante Logixx

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avante Logixx are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Avante Logixx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valeura Energy and Avante Logixx

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

The idea behind Valeura Energy and Avante Logixx 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.