Correlation Between GEK TERNA and Avax SA

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

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

Diversification Opportunities for GEK TERNA and Avax SA

0.84

Correlation Coefficient

GEK TERNA  Avax SA

Very poor diversification

The 3 months correlation between GEK and Avax is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding GEK TERNA Holdings and Avax SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avax SA and GEK TERNA 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 GEK TERNA Holdings are associated (or correlated) with Avax SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avax SA has no effect on the direction of GEK TERNA i.e., GEK TERNA and Avax SA go up and down completely randomly.

Pair Corralation between GEK TERNA and Avax SA

Assuming the 90 days trading horizon GEK TERNA is expected to generate 1.01 times less return on investment than Avax SA. But when comparing it to its historical volatility, GEK TERNA Holdings is 1.86 times less risky than Avax SA. It trades about 0.2 of its potential returns per unit of risk. Avax SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Avax SA on April 23, 2025 and sell it today you would earn a total of  26.00  from holding Avax SA or generate 13.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

GEK TERNA Holdings  vs.  Avax SA

GEK TERNA Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GEK TERNA Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, GEK TERNA displayed solid returns over the last few months and may actually be approaching a breakup point.

Avax SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avax SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Avax SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEK TERNA and Avax SA

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

The idea behind GEK TERNA Holdings and Avax SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.