Correlation Between Asia United and First Abacus
Can any of the company-specific risk be diversified away by investing in both Asia United and First Abacus 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 Asia United and First Abacus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia United Bank and First Abacus Financial, you can compare the effects of market volatilities on Asia United and First Abacus 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 Asia United with a short position of First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia United and First Abacus.
Diversification Opportunities for Asia United and First Abacus
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asia and First is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Asia United Bank and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial and Asia United 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 Asia United Bank are associated (or correlated) with First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Asia United i.e., Asia United and First Abacus go up and down completely randomly.
Pair Corralation between Asia United and First Abacus
Assuming the 90 days trading horizon Asia United Bank is expected to generate 0.14 times more return on investment than First Abacus. However, Asia United Bank is 7.2 times less risky than First Abacus. It trades about -0.07 of its potential returns per unit of risk. First Abacus Financial is currently generating about -0.11 per unit of risk. If you would invest 6,200 in Asia United Bank on September 21, 2024 and sell it today you would lose (100.00) from holding Asia United Bank or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 39.13% |
| Values | Daily Returns |
Asia United Bank vs. First Abacus Financial
Performance |
| Timeline |
| Asia United Bank |
| First Abacus Financial |
Asia United and First Abacus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia United and First Abacus
The main advantage of trading using opposite Asia United and First Abacus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia United position performs unexpectedly, First Abacus 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 First Abacus will offset losses from the drop in First Abacus' long position.| Asia United vs. BDO Unibank | Asia United vs. Union Bank of | Asia United vs. Philippine National Bank | Asia United vs. East West Banking |
| First Abacus vs. Jollibee Foods Corp | First Abacus vs. STI Education Systems | First Abacus vs. SM Investments Corp | First Abacus vs. Asia United Bank |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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