Correlation Between Armada Mercantile and ABS CBN

Can any of the company-specific risk be diversified away by investing in both Armada Mercantile and ABS CBN 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 Armada Mercantile and ABS CBN into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Armada Mercantile and ABS CBN

0.0

Correlation Coefficient

Armada Mercantile  ABS CBN

Pay attention - limited upside

The 3 months correlation between Armada and ABS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Armada Mercantile and ABS CBN Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABS CBN Holdings and Armada Mercantile 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 Armada Mercantile are associated (or correlated) with ABS CBN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABS CBN Holdings has no effect on the direction of Armada Mercantile i.e., Armada Mercantile and ABS CBN go up and down completely randomly.

Pair Corralation between Armada Mercantile and ABS CBN

If you would invest  11.00  in ABS CBN Holdings on September 3, 2024 and sell it today you would earn a total of  0.00  from holding ABS CBN Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Armada Mercantile  vs.  ABS CBN Holdings

Armada Mercantile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Mercantile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ABS CBN Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABS CBN Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABS CBN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Armada Mercantile and ABS CBN

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

The idea behind Armada Mercantile and ABS CBN Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.