Correlation Between Bright Kindle and First Abacus
Can any of the company-specific risk be diversified away by investing in both Bright Kindle 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 Bright Kindle and First Abacus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Kindle Resources and First Abacus Financial, you can compare the effects of market volatilities on Bright Kindle 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 Bright Kindle with a short position of First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Kindle and First Abacus.
Diversification Opportunities for Bright Kindle and First Abacus
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bright and First is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bright Kindle Resources 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 Bright Kindle 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 Bright Kindle Resources 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 Bright Kindle i.e., Bright Kindle and First Abacus go up and down completely randomly.
Pair Corralation between Bright Kindle and First Abacus
Assuming the 90 days trading horizon Bright Kindle Resources is expected to under-perform the First Abacus. But the stock apears to be less risky and, when comparing its historical volatility, Bright Kindle Resources is 1.34 times less risky than First Abacus. The stock trades about -0.08 of its potential returns per unit of risk. The First Abacus Financial is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 63.00 in First Abacus Financial on August 25, 2024 and sell it today you would earn a total of 6.00 from holding First Abacus Financial or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.58% |
| Values | Daily Returns |
Bright Kindle Resources vs. First Abacus Financial
Performance |
| Timeline |
| Bright Kindle Resources |
| First Abacus Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Bright Kindle and First Abacus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Kindle and First Abacus
The main advantage of trading using opposite Bright Kindle and First Abacus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Kindle 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.| Bright Kindle vs. Top Frontier Investment | Bright Kindle vs. Cebu Air Preferred | Bright Kindle vs. Converge Information Communications | Bright Kindle vs. Jollibee Foods Corp |
| First Abacus vs. Bright Kindle Resources | First Abacus vs. Allhome Corp | First Abacus vs. Jollibee Foods Corp | First Abacus vs. LFM Properties 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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