Correlation Between Associated British and Albion Technology
Can any of the company-specific risk be diversified away by investing in both Associated British and Albion Technology 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 Associated British and Albion Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Albion Technology General, you can compare the effects of market volatilities on Associated British and Albion Technology 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 Associated British with a short position of Albion Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Albion Technology.
Diversification Opportunities for Associated British and Albion Technology
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Associated and Albion is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Albion Technology General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albion Technology General and Associated British 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 Associated British Foods are associated (or correlated) with Albion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albion Technology General has no effect on the direction of Associated British i.e., Associated British and Albion Technology go up and down completely randomly.
Pair Corralation between Associated British and Albion Technology
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Albion Technology. In addition to that, Associated British is 1.08 times more volatile than Albion Technology General. It trades about -0.12 of its total potential returns per unit of risk. Albion Technology General is currently generating about -0.05 per unit of volatility. If you would invest 6,962 in Albion Technology General on August 29, 2024 and sell it today you would lose (112.00) from holding Albion Technology General or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Albion Technology General
Performance |
| Timeline |
| Associated British Foods |
| Albion Technology General |
Associated British and Albion Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Albion Technology
The main advantage of trading using opposite Associated British and Albion Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Albion Technology 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 Albion Technology will offset losses from the drop in Albion Technology's long position.| Associated British vs. InterContinental Hotels Group | Associated British vs. GreenX Metals | Associated British vs. National Beverage Corp | Associated British vs. Odfjell Drilling |
| Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Hyundai Motor | Albion Technology vs. Toyota Motor Corp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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