Correlation Between Avonmore Capital and Salzer Electronics

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

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

Diversification Opportunities for Avonmore Capital and Salzer Electronics

0.35

Correlation Coefficient

Avonmore Capital  Salzer Electronics

Weak diversification

The 3 months correlation between Avonmore and Salzer is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Avonmore Capital Management and Salzer Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzer Electronics and Avonmore Capital 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 Avonmore Capital Management are associated (or correlated) with Salzer Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzer Electronics has no effect on the direction of Avonmore Capital i.e., Avonmore Capital and Salzer Electronics go up and down completely randomly.

Pair Corralation between Avonmore Capital and Salzer Electronics

Assuming the 90 days trading horizon Avonmore Capital is expected to generate 2.24 times less return on investment than Salzer Electronics. But when comparing it to its historical volatility, Avonmore Capital Management is 1.57 times less risky than Salzer Electronics. It trades about 0.06 of its potential returns per unit of risk. Salzer Electronics Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,071  in Salzer Electronics Limited on March 24, 2025 and sell it today you would earn a total of  73,509  from holding Salzer Electronics Limited or generate 487.75% return on investment over 90 days.

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

Avonmore Capital Management  vs.  Salzer Electronics Limited

Avonmore Capital Man

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avonmore Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Avonmore Capital is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Salzer Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salzer Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in July 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Avonmore Capital and Salzer Electronics

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

The idea behind Avonmore Capital Management and Salzer Electronics Limited 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.