Correlation Between Where Food and AviChina Industry

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

By analyzing existing cross correlation between Where Food Comes and AviChina Industry Technology, you can compare the effects of market volatilities on Where Food and AviChina Industry 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 Where Food with a short position of AviChina Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Where Food and AviChina Industry.

Diversification Opportunities for Where Food and AviChina Industry

-0.84

Correlation Coefficient

Where Food  AviChina Industry

Pay attention - limited upside

The 3 months correlation between Where and AviChina is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes and AviChina Industry Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AviChina Industry and Where Food 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 Where Food Comes are associated (or correlated) with AviChina Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AviChina Industry has no effect on the direction of Where Food i.e., Where Food and AviChina Industry go up and down completely randomly.

Pair Corralation between Where Food and AviChina Industry

Given the investment horizon of 90 days Where Food is expected to generate 11.51 times less return on investment than AviChina Industry. But when comparing it to its historical volatility, Where Food Comes is 1.11 times less risky than AviChina Industry. It trades about 0.0 of its potential returns per unit of risk. AviChina Industry Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  31.00  in AviChina Industry Technology on September 23, 2024 and sell it today you would earn a total of  6.00  from holding AviChina Industry Technology or generate 19.35% return on investment over 90 days.

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

Where Food Comes  vs.  AviChina Industry Technology

Where Food Comes

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Where Food Comes are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Where Food reported solid returns over the last few months and may actually be approaching a breakup point.

AviChina Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AviChina Industry Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Where Food and AviChina Industry

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

The idea behind Where Food Comes and AviChina Industry Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.