Correlation Between ABACUS STORAGE and Energy Resources
Can any of the company-specific risk be diversified away by investing in both ABACUS STORAGE and Energy Resources 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 ABACUS STORAGE and Energy Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABACUS STORAGE KING and Energy Resources, you can compare the effects of market volatilities on ABACUS STORAGE and Energy Resources 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 ABACUS STORAGE with a short position of Energy Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABACUS STORAGE and Energy Resources.
Diversification Opportunities for ABACUS STORAGE and Energy Resources
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ABACUS and Energy is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding ABACUS STORAGE KING and Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Resources and ABACUS STORAGE 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 ABACUS STORAGE KING are associated (or correlated) with Energy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Resources has no effect on the direction of ABACUS STORAGE i.e., ABACUS STORAGE and Energy Resources go up and down completely randomly.
Pair Corralation between ABACUS STORAGE and Energy Resources
Assuming the 90 days trading horizon ABACUS STORAGE KING is expected to under-perform the Energy Resources. But the stock apears to be less risky and, when comparing its historical volatility, ABACUS STORAGE KING is 22.29 times less risky than Energy Resources. The stock trades about -0.25 of its potential returns per unit of risk. The Energy Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Energy Resources on August 29, 2024 and sell it today you would earn a total of 0.10 from holding Energy Resources or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABACUS STORAGE KING vs. Energy Resources
Performance |
| Timeline |
| ABACUS STORAGE KING |
| Energy Resources |
ABACUS STORAGE and Energy Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABACUS STORAGE and Energy Resources
The main advantage of trading using opposite ABACUS STORAGE and Energy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABACUS STORAGE position performs unexpectedly, Energy Resources 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 Energy Resources will offset losses from the drop in Energy Resources' long position.| ABACUS STORAGE vs. Westpac Banking | ABACUS STORAGE vs. Odyssey Energy | ABACUS STORAGE vs. Insurance Australia Group | ABACUS STORAGE vs. Origin Energy |
| Energy Resources vs. Data3 | Energy Resources vs. Mayfield Childcare | Energy Resources vs. Toys R Us | Energy Resources vs. Super Retail Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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