Correlation Between Compagnie and ABO

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

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

Diversification Opportunities for Compagnie and ABO

0.82

Correlation Coefficient

Compagnie  ABO

Very poor diversification

The 3 months correlation between Compagnie and ABO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie d Entreprises and ABO Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABO Group and Compagnie 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 Compagnie d Entreprises are associated (or correlated) with ABO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABO Group has no effect on the direction of Compagnie i.e., Compagnie and ABO go up and down completely randomly.

Pair Corralation between Compagnie and ABO

Assuming the 90 days trading horizon Compagnie d Entreprises is expected to under-perform the ABO. In addition to that, Compagnie is 1.24 times more volatile than ABO Group. It trades about -0.17 of its total potential returns per unit of risk. ABO Group is currently generating about -0.15 per unit of volatility. If you would invest  565.00  in ABO Group on September 3, 2024 and sell it today you would lose (65.00) from holding ABO Group or give up 11.5% of portfolio value over 90 days.

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

Compagnie d Entreprises  vs.  ABO Group

Compagnie d Entreprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie d Entreprises has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ABO Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABO Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Compagnie and ABO

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

The idea behind Compagnie d Entreprises and ABO Group 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 Stocks Directory module to find actively traded stocks across global markets.