Correlation Between ABO GROUP and LONDON STEXUNSPADRS12

Can any of the company-specific risk be diversified away by investing in both ABO GROUP and LONDON STEXUNSPADRS12 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 ABO GROUP and LONDON STEXUNSPADRS12 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ABO GROUP ENVIRONMENT and LONDON STEXUNSPADRS12, you can compare the effects of market volatilities on ABO GROUP and LONDON STEXUNSPADRS12 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 ABO GROUP with a short position of LONDON STEXUNSPADRS12. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABO GROUP and LONDON STEXUNSPADRS12.

Diversification Opportunities for ABO GROUP and LONDON STEXUNSPADRS12

-0.89

Correlation Coefficient

ABO GROUP  LONDON STEXUNSPADRS12

Pay attention - limited upside

The 3 months correlation between ABO and LONDON is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding ABO GROUP ENVIRONMENT and LONDON STEXUNSPADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LONDON STEXUNSPADRS12 and ABO GROUP 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 ABO GROUP ENVIRONMENT are associated (or correlated) with LONDON STEXUNSPADRS12. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LONDON STEXUNSPADRS12 has no effect on the direction of ABO GROUP i.e., ABO GROUP and LONDON STEXUNSPADRS12 go up and down completely randomly.

Pair Corralation between ABO GROUP and LONDON STEXUNSPADRS12

Assuming the 90 days trading horizon ABO GROUP ENVIRONMENT is expected to under-perform the LONDON STEXUNSPADRS12. But the stock apears to be less risky and, when comparing its historical volatility, ABO GROUP ENVIRONMENT is 1.21 times less risky than LONDON STEXUNSPADRS12. The stock trades about -0.14 of its potential returns per unit of risk. The LONDON STEXUNSPADRS12 is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,220  in LONDON STEXUNSPADRS12 on September 20, 2024 and sell it today you would earn a total of  220.00  from holding LONDON STEXUNSPADRS12 or generate 6.83% return on investment over 90 days.

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

ABO GROUP ENVIRONMENT  vs.  LONDON STEXUNSPADRS12

ABO GROUP ENVIRONMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABO GROUP ENVIRONMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

LONDON STEXUNSPADRS12

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LONDON STEXUNSPADRS12 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LONDON STEXUNSPADRS12 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ABO GROUP and LONDON STEXUNSPADRS12

The main advantage of trading using opposite ABO GROUP and LONDON STEXUNSPADRS12 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABO GROUP position performs unexpectedly, LONDON STEXUNSPADRS12 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 LONDON STEXUNSPADRS12 will offset losses from the drop in LONDON STEXUNSPADRS12's long position.

The idea behind ABO GROUP ENVIRONMENT and LONDON STEXUNSPADRS12 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.