Correlation Between ABO GROUP and FARM 51
Can any of the company-specific risk be diversified away by investing in both ABO GROUP and FARM 51 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 ABO GROUP and FARM 51 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABO GROUP ENVIRONMENT and FARM 51 GROUP, you can compare the effects of market volatilities on ABO GROUP and FARM 51 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 ABO GROUP with a short position of FARM 51. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABO GROUP and FARM 51.
Diversification Opportunities for ABO GROUP and FARM 51
Poor diversification
The 3 months correlation between ABO and FARM is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ABO GROUP ENVIRONMENT and FARM 51 GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM 51 GROUP and ABO GROUP 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 ABO GROUP ENVIRONMENT are associated (or correlated) with FARM 51. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM 51 GROUP has no effect on the direction of ABO GROUP i.e., ABO GROUP and FARM 51 go up and down completely randomly.
Pair Corralation between ABO GROUP and FARM 51
Assuming the 90 days trading horizon ABO GROUP ENVIRONMENT is expected to under-perform the FARM 51. But the stock apears to be less risky and, when comparing its historical volatility, ABO GROUP ENVIRONMENT is 1.51 times less risky than FARM 51. The stock trades about -0.14 of its potential returns per unit of risk. The FARM 51 GROUP is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 321.00 in FARM 51 GROUP on September 29, 2024 and sell it today you would lose (38.00) from holding FARM 51 GROUP or give up 11.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABO GROUP ENVIRONMENT vs. FARM 51 GROUP
Performance |
| Timeline |
| ABO GROUP ENVIRONMENT |
| FARM 51 GROUP |
ABO GROUP and FARM 51 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABO GROUP and FARM 51
The main advantage of trading using opposite ABO GROUP and FARM 51 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABO GROUP position performs unexpectedly, FARM 51 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 FARM 51 will offset losses from the drop in FARM 51's long position.The idea behind ABO GROUP ENVIRONMENT and FARM 51 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.| FARM 51 vs. ABO GROUP ENVIRONMENT | FARM 51 vs. Xenia Hotels Resorts | FARM 51 vs. InterContinental Hotels Group | FARM 51 vs. Pebblebrook Hotel Trust |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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