Correlation Between Aban Offshore and Can Fin

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

By analyzing existing cross correlation between Aban Offshore Limited and Can Fin Homes, you can compare the effects of market volatilities on Aban Offshore and Can Fin 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 Aban Offshore with a short position of Can Fin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aban Offshore and Can Fin.

Diversification Opportunities for Aban Offshore and Can Fin

0.66

Correlation Coefficient

Aban Offshore  Can Fin

Poor diversification

The 3 months correlation between Aban and Can is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aban Offshore Limited and Can Fin Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Can Fin Homes and Aban Offshore 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 Aban Offshore Limited are associated (or correlated) with Can Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Can Fin Homes has no effect on the direction of Aban Offshore i.e., Aban Offshore and Can Fin go up and down completely randomly.

Pair Corralation between Aban Offshore and Can Fin

Assuming the 90 days trading horizon Aban Offshore Limited is expected to under-perform the Can Fin. In addition to that, Aban Offshore is 1.22 times more volatile than Can Fin Homes. It trades about -0.15 of its total potential returns per unit of risk. Can Fin Homes is currently generating about -0.04 per unit of volatility. If you would invest  88,565  in Can Fin Homes on September 5, 2024 and sell it today you would lose (5,105) from holding Can Fin Homes or give up 5.76% of portfolio value over 90 days.

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

Aban Offshore Limited  vs.  Can Fin Homes

Aban Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aban Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Can Fin Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Can Fin Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Can Fin is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Aban Offshore and Can Fin

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

The idea behind Aban Offshore Limited and Can Fin Homes 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.