Correlation Between Ab All and Pin Oak

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

By analyzing existing cross correlation between Ab All China and Pin Oak Equity, you can compare the effects of market volatilities on Ab All and Pin Oak 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 All with a short position of Pin Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab All and Pin Oak.

Diversification Opportunities for Ab All and Pin Oak

-0.35

Correlation Coefficient

Ab All  Pin Oak

Very good diversification

The 3 months correlation between ACEAX and Pin is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ab All China and Pin Oak Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pin Oak Equity and Ab All 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 All China are associated (or correlated) with Pin Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pin Oak Equity has no effect on the direction of Ab All i.e., Ab All and Pin Oak go up and down completely randomly.

Pair Corralation between Ab All and Pin Oak

Assuming the 90 days horizon Ab All China is expected to generate 0.98 times more return on investment than Pin Oak. However, Ab All China is 1.02 times less risky than Pin Oak. It trades about -0.05 of its potential returns per unit of risk. Pin Oak Equity is currently generating about -0.08 per unit of risk. If you would invest  881.00  in Ab All China on September 29, 2024 and sell it today you would lose (69.00) from holding Ab All China or give up 7.83% of portfolio value over 90 days.

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

Ab All China  vs.  Pin Oak Equity

Ab All China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab All China has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pin Oak Equity

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Pin Oak Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ab All and Pin Oak

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

The idea behind Ab All China and Pin Oak Equity 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.