Correlation Between Avalanche and SPACE

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

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

Diversification Opportunities for Avalanche and SPACE

0.85

Correlation Coefficient

Avalanche  SPACE

Very poor diversification

The 3 months correlation between Avalanche and SPACE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE and Avalanche 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 Avalanche are associated (or correlated) with SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of Avalanche i.e., Avalanche and SPACE go up and down completely randomly.

Pair Corralation between Avalanche and SPACE

Assuming the 90 days trading horizon Avalanche is expected to generate 0.87 times more return on investment than SPACE. However, Avalanche is 1.15 times less risky than SPACE. It trades about 0.05 of its potential returns per unit of risk. SPACE is currently generating about 0.0 per unit of risk. If you would invest  2,235  in Avalanche on April 22, 2025 and sell it today you would earn a total of  216.00  from holding Avalanche or generate 9.66% return on investment over 90 days.

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

Avalanche  vs.  SPACE

Avalanche

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avalanche are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Avalanche exhibited solid returns over the last few months and may actually be approaching a breakup point.

SPACE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPACE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, SPACE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Avalanche and SPACE

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

The idea behind Avalanche and SPACE 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..