Correlation Between ALM Equity and Abliva AB

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Can any of the company-specific risk be diversified away by investing in both ALM Equity and Abliva AB 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 ALM Equity and Abliva AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALM Equity AB and Abliva AB, you can compare the effects of market volatilities on ALM Equity and Abliva AB 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 ALM Equity with a short position of Abliva AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALM Equity and Abliva AB.

Diversification Opportunities for ALM Equity and Abliva AB

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ALM and Abliva is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding ALM Equity AB and Abliva AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abliva AB and ALM Equity 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 ALM Equity AB are associated (or correlated) with Abliva AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abliva AB has no effect on the direction of ALM Equity i.e., ALM Equity and Abliva AB go up and down completely randomly.

Pair Corralation between ALM Equity and Abliva AB

Assuming the 90 days trading horizon ALM Equity is expected to generate 10.61 times less return on investment than Abliva AB. But when comparing it to its historical volatility, ALM Equity AB is 8.99 times less risky than Abliva AB. It trades about 0.03 of its potential returns per unit of risk. Abliva AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Abliva AB on October 31, 2024 and sell it today you would earn a total of  14.00  from holding Abliva AB or generate 46.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

ALM Equity AB  vs.  Abliva AB

 Performance 
       Timeline  
ALM Equity AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ALM Equity AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ALM Equity is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Abliva AB 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Abliva AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Abliva AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

ALM Equity and Abliva AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ALM Equity and Abliva AB

The main advantage of trading using opposite ALM Equity and Abliva AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALM Equity position performs unexpectedly, Abliva AB 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 Abliva AB will offset losses from the drop in Abliva AB's long position.
The idea behind ALM Equity AB and Abliva AB 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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