Correlation Between Ab Global and Simt Real

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

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

Diversification Opportunities for Ab Global and Simt Real

0.63

Correlation Coefficient

Ab Global  Simt Real

Poor diversification

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

Pair Corralation between Ab Global and Simt Real

Assuming the 90 days horizon Ab Global Risk is expected to under-perform the Simt Real. In addition to that, Ab Global is 1.83 times more volatile than Simt Real Estate. It trades about -0.14 of its total potential returns per unit of risk. Simt Real Estate is currently generating about -0.14 per unit of volatility. If you would invest  1,735  in Simt Real Estate on September 20, 2024 and sell it today you would lose (155.00) from holding Simt Real Estate or give up 8.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Ab Global Risk  vs.  Simt Real Estate

Ab Global Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Global Risk has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly 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 fund investors.

Simt Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Real Estate 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 Global and Simt Real

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

The idea behind Ab Global Risk and Simt Real Estate 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.