Correlation Between AVE SA and Public Power

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

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

Diversification Opportunities for AVE SA and Public Power

0.31

Correlation Coefficient

AVE SA  Public Power

Weak diversification

The 3 months correlation between AVE and Public is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AVE SA and Public Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Power 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 Public Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Power has no effect on the direction of AVE SA i.e., AVE SA and Public Power go up and down completely randomly.

Pair Corralation between AVE SA and Public Power

Assuming the 90 days trading horizon AVE SA is expected to generate 1.93 times more return on investment than Public Power. However, AVE SA is 1.93 times more volatile than Public Power. It trades about 0.13 of its potential returns per unit of risk. Public Power is currently generating about 0.15 per unit of risk. If you would invest  44.00  in AVE SA on April 22, 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AVE SA  vs.  Public Power

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.

Public Power

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Public Power are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Public Power may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with AVE SA and Public Power

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

The idea behind AVE SA and Public Power 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.