Correlation Between AB International and Astra Veda

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

By analyzing existing cross correlation between AB International Group and Astra Veda, you can compare the effects of market volatilities on AB International and Astra Veda 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 AB International with a short position of Astra Veda. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB International and Astra Veda.

Diversification Opportunities for AB International and Astra Veda

-0.63

Correlation Coefficient

AB International  Astra Veda

Excellent diversification

The 3 months correlation between ABQQ and Astra is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding AB International Group and Astra Veda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Veda and AB International 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 AB International Group are associated (or correlated) with Astra Veda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Veda has no effect on the direction of AB International i.e., AB International and Astra Veda go up and down completely randomly.

Pair Corralation between AB International and Astra Veda

Given the investment horizon of 90 days AB International Group is expected to generate 1.3 times more return on investment than Astra Veda. However, AB International is 1.3 times more volatile than Astra Veda. It trades about 0.09 of its potential returns per unit of risk. Astra Veda is currently generating about 0.03 per unit of risk. If you would invest  0.12  in AB International Group on September 14, 2024 and sell it today you would lose (0.03) from holding AB International Group or give up 25.0% of portfolio value over 90 days.

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

AB International Group  vs.  Astra Veda

AB International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AB International Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, AB International reported solid returns over the last few months and may actually be approaching a breakup point.

Astra Veda

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Astra Veda are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Astra Veda sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AB International and Astra Veda

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

The idea behind AB International Group and Astra Veda 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .