Correlation Between AB International and DigitalTown

Can any of the company-specific risk be diversified away by investing in both AB International and DigitalTown 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 DigitalTown 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 DigitalTown, you can compare the effects of market volatilities on AB International and DigitalTown 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 DigitalTown. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB International and DigitalTown.

Diversification Opportunities for AB International and DigitalTown

0.0

Correlation Coefficient

AB International  DigitalTown

Pay attention - limited upside

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

Pair Corralation between AB International and DigitalTown

If you would invest  0.05  in AB International Group on September 24, 2024 and sell it today you would earn a total of  0.03  from holding AB International Group or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

AB International Group  vs.  DigitalTown

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 abnormal basic indicators, AB International reported solid returns over the last few months and may actually be approaching a breakup point.

DigitalTown

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigitalTown has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, DigitalTown is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AB International and DigitalTown

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

The idea behind AB International Group and DigitalTown 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.