Correlation Between Avalon Holdings and SemiLEDS

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

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

Diversification Opportunities for Avalon Holdings and SemiLEDS

-0.72

Correlation Coefficient

Avalon Holdings  SemiLEDS

Pay attention - limited upside

The 3 months correlation between Avalon and SemiLEDS is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Avalon Holdings and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS 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 SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of Avalon Holdings i.e., Avalon Holdings and SemiLEDS go up and down completely randomly.

Pair Corralation between Avalon Holdings and SemiLEDS

Considering the 90-day investment horizon Avalon Holdings is expected to generate 0.35 times more return on investment than SemiLEDS. However, Avalon Holdings is 2.84 times less risky than SemiLEDS. It trades about -0.03 of its potential returns per unit of risk. SemiLEDS is currently generating about -0.07 per unit of risk. If you would invest  270.00  in Avalon Holdings on May 4, 2025 and sell it today you would lose (12.00) from holding Avalon Holdings or give up 4.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Avalon Holdings  vs.  SemiLEDS

Avalon Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avalon Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

SemiLEDS

Risk-Adjusted Performance

Very Weak

Over the last 90 days SemiLEDS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Avalon Holdings and SemiLEDS

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

The idea behind Avalon Holdings and SemiLEDS 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.