Correlation Between ABCO Energy and Holiday Island

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

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

Diversification Opportunities for ABCO Energy and Holiday Island

0.0

Correlation Coefficient

ABCO Energy  Holiday Island

Pay attention - limited upside

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

Pair Corralation between ABCO Energy and Holiday Island

If you would invest  2.62  in Holiday Island Holdings on September 30, 2024 and sell it today you would lose (0.93) from holding Holiday Island Holdings or give up 35.5% of portfolio value over 90 days.

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

ABCO Energy  vs.  Holiday Island Holdings

ABCO Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABCO Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ABCO Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Holiday Island Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Holiday Island Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical indicators, Holiday Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ABCO Energy and Holiday Island

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

The idea behind ABCO Energy and Holiday Island 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.