Correlation Between AVE SA and Athens Water

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

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

Diversification Opportunities for AVE SA and Athens Water

-0.07

Correlation Coefficient

AVE SA  Athens Water

Good diversification

The 3 months correlation between AVE and Athens is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding AVE SA and Athens Water Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athens Water Supply and AVE SA 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 AVE SA are associated (or correlated) with Athens Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athens Water Supply has no effect on the direction of AVE SA i.e., AVE SA and Athens Water go up and down completely randomly.

Pair Corralation between AVE SA and Athens Water

Assuming the 90 days trading horizon AVE SA is expected to generate 1.32 times more return on investment than Athens Water. However, AVE SA is 1.32 times more volatile than Athens Water Supply. It trades about 0.13 of its potential returns per unit of risk. Athens Water Supply is currently generating about 0.11 per unit of risk. If you would invest  44.00  in AVE SA on April 25, 2025 and sell it today you would earn a total of  9.00  from holding AVE SA or generate 20.45% return on investment over 90 days.

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

AVE SA  vs.  Athens Water Supply

AVE SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AVE SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, AVE SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Athens Water Supply

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Athens Water Supply are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Athens Water sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVE SA and Athens Water

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

The idea behind AVE SA and Athens Water Supply 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.