Correlation Between Consolidated Construction and ABM International
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By analyzing existing cross correlation between Consolidated Construction Consortium and ABM International Limited, you can compare the effects of market volatilities on Consolidated Construction and ABM International 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 Consolidated Construction with a short position of ABM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and ABM International.
Diversification Opportunities for Consolidated Construction and ABM International
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consolidated and ABM is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and ABM International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABM International and Consolidated Construction 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 Consolidated Construction Consortium are associated (or correlated) with ABM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABM International has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and ABM International go up and down completely randomly.
Pair Corralation between Consolidated Construction and ABM International
Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 0.78 times more return on investment than ABM International. However, Consolidated Construction Consortium is 1.28 times less risky than ABM International. It trades about 0.05 of its potential returns per unit of risk. ABM International Limited is currently generating about -0.31 per unit of risk. If you would invest 1,844 in Consolidated Construction Consortium on September 2, 2024 and sell it today you would earn a total of 51.00 from holding Consolidated Construction Consortium or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Construction Cons vs. ABM International Limited
Performance |
| Timeline |
| Consolidated Construction |
| ABM International |
Consolidated Construction and ABM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Construction and ABM International
The main advantage of trading using opposite Consolidated Construction and ABM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction position performs unexpectedly, ABM International 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 ABM International will offset losses from the drop in ABM International's long position.The idea behind Consolidated Construction Consortium and ABM International Limited 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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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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