Correlation Between Idx Risk and Ab Select

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

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

Diversification Opportunities for Idx Risk and Ab Select

0.68

Correlation Coefficient

Idx Risk  Ab Select

Poor diversification

The 3 months correlation between Idx and AUUIX is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Idx Risk Managed Bitcoin and Ab Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Equity and Idx Risk 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 Idx Risk Managed Bitcoin are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Equity has no effect on the direction of Idx Risk i.e., Idx Risk and Ab Select go up and down completely randomly.

Pair Corralation between Idx Risk and Ab Select

Assuming the 90 days horizon Idx Risk Managed Bitcoin is expected to generate 2.83 times more return on investment than Ab Select. However, Idx Risk is 2.83 times more volatile than Ab Select Equity. It trades about 0.06 of its potential returns per unit of risk. Ab Select Equity is currently generating about 0.09 per unit of risk. If you would invest  603.00  in Idx Risk Managed Bitcoin on September 16, 2024 and sell it today you would earn a total of  386.00  from holding Idx Risk Managed Bitcoin or generate 64.01% return on investment over 90 days.

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

Idx Risk Managed Bitcoin  vs.  Ab Select Equity

Idx Risk Managed

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Idx Risk Managed Bitcoin are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Idx Risk showed solid returns over the last few months and may actually be approaching a breakup point.

Ab Select Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Select Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ab Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Idx Risk and Ab Select

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

The idea behind Idx Risk Managed Bitcoin and Ab Select 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 CEOs Directory module to screen CEOs from public companies around the world.