Correlation Between C I and Abra Information

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

By analyzing existing cross correlation between C I Systems and Abra Information Technologies, you can compare the effects of market volatilities on C I and Abra Information 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 C I with a short position of Abra Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of C I and Abra Information.

Diversification Opportunities for C I and Abra Information

0.28

Correlation Coefficient

C I  Abra Information

Modest diversification

The 3 months correlation between CISY and Abra is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding C I Systems and Abra Information Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abra Information Tec and C I 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 C I Systems are associated (or correlated) with Abra Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abra Information Tec has no effect on the direction of C I i.e., C I and Abra Information go up and down completely randomly.

Pair Corralation between C I and Abra Information

Assuming the 90 days trading horizon C I is expected to generate 2.73 times less return on investment than Abra Information. But when comparing it to its historical volatility, C I Systems is 1.09 times less risky than Abra Information. It trades about 0.04 of its potential returns per unit of risk. Abra Information Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  26,780  in Abra Information Technologies on September 29, 2024 and sell it today you would earn a total of  2,850  from holding Abra Information Technologies or generate 10.64% return on investment over 90 days.

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

C I Systems  vs.  Abra Information Technologies

C I Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in C I Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, C I is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Abra Information Tec

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abra Information Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Abra Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C I and Abra Information

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

The idea behind C I Systems and Abra Information Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.