Correlation Between Avalon Holdings and Trustcash Holdings

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

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

Diversification Opportunities for Avalon Holdings and Trustcash Holdings

0.37

Correlation Coefficient

Avalon Holdings  Trustcash Holdings

Weak diversification

The 3 months correlation between Avalon and Trustcash is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Avalon Holdings and Trustcash Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trustcash Holdings and Avalon 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 Avalon Holdings are associated (or correlated) with Trustcash Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trustcash Holdings has no effect on the direction of Avalon Holdings i.e., Avalon Holdings and Trustcash Holdings go up and down completely randomly.

Pair Corralation between Avalon Holdings and Trustcash Holdings

If you would invest  0.01  in Trustcash Holdings on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Trustcash Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

Avalon Holdings  vs.  Trustcash Holdings

Avalon Holdings

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avalon Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Avalon Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Trustcash Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trustcash Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Trustcash Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Avalon Holdings and Trustcash Holdings

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

The idea behind Avalon Holdings and Trustcash Holdings 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.