Correlation Between Abacus Life and Maiden Holdings

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

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

Diversification Opportunities for Abacus Life and Maiden Holdings

0.26

Correlation Coefficient

Abacus Life  Maiden Holdings

Modest diversification

The 3 months correlation between Abacus and Maiden is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings and Abacus Life 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 Abacus Life are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of Abacus Life i.e., Abacus Life and Maiden Holdings go up and down completely randomly.

Pair Corralation between Abacus Life and Maiden Holdings

Considering the 90-day investment horizon Abacus Life is expected to under-perform the Maiden Holdings. In addition to that, Abacus Life is 2.05 times more volatile than Maiden Holdings. It trades about -0.14 of its total potential returns per unit of risk. Maiden Holdings is currently generating about -0.15 per unit of volatility. If you would invest  1,635  in Maiden Holdings on September 27, 2024 and sell it today you would lose (225.00) from holding Maiden Holdings or give up 13.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Abacus Life  vs.  Maiden Holdings

Abacus Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abacus Life 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 fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maiden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Abacus Life and Maiden Holdings

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

The idea behind Abacus Life and Maiden 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 CEOs Directory module to screen CEOs from public companies around the world.