Correlation Between ING Bank and AB SA
Can any of the company-specific risk be diversified away by investing in both ING Bank and AB SA 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 ING Bank and AB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Bank lski and AB SA, you can compare the effects of market volatilities on ING Bank and AB SA 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 ING Bank with a short position of AB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Bank and AB SA.
Diversification Opportunities for ING Bank and AB SA
Very weak diversification
The 3 months correlation between ING and ABE is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski and AB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB SA and ING Bank 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 ING Bank lski are associated (or correlated) with AB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB SA has no effect on the direction of ING Bank i.e., ING Bank and AB SA go up and down completely randomly.
Pair Corralation between ING Bank and AB SA
Assuming the 90 days trading horizon ING Bank lski is expected to under-perform the AB SA. But the stock apears to be less risky and, when comparing its historical volatility, ING Bank lski is 1.07 times less risky than AB SA. The stock trades about -0.24 of its potential returns per unit of risk. The AB SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8,900 in AB SA on August 30, 2024 and sell it today you would earn a total of 40.00 from holding AB SA or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Bank lski vs. AB SA
Performance |
| Timeline |
| ING Bank lski |
| AB SA |
ING Bank and AB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Bank and AB SA
The main advantage of trading using opposite ING Bank and AB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Bank position performs unexpectedly, AB SA 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 AB SA will offset losses from the drop in AB SA's long position.| ING Bank vs. Logintrade SA | ING Bank vs. True Games Syndicate | ING Bank vs. Detalion Games SA | ING Bank vs. Carlson Investments SA |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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