Correlation Between Emmi AG and Avi

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

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

Diversification Opportunities for Emmi AG and Avi

0.1

Correlation Coefficient

Emmi AG  Avi

Average diversification

The 3 months correlation between Emmi and Avi is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and Avi Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avi Ltd ADR and Emmi AG 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 Emmi AG are associated (or correlated) with Avi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avi Ltd ADR has no effect on the direction of Emmi AG i.e., Emmi AG and Avi go up and down completely randomly.

Pair Corralation between Emmi AG and Avi

Assuming the 90 days horizon Emmi AG is expected to generate 1.63 times less return on investment than Avi. But when comparing it to its historical volatility, Emmi AG is 1.63 times less risky than Avi. It trades about 0.21 of its potential returns per unit of risk. Avi Ltd ADR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,168  in Avi Ltd ADR on February 4, 2024 and sell it today you would earn a total of  54.00  from holding Avi Ltd ADR or generate 2.49% return on investment over 90 days.

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

Emmi AG  vs.  Avi Ltd ADR

Emmi AG

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emmi AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Emmi AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Avi Ltd ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avi Ltd ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Avi may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Emmi AG and Avi

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

The idea behind Emmi AG and Avi Ltd ADR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.