Correlation Between KEY and ABL
Can any of the company-specific risk be diversified away by investing in both KEY and ABL 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 KEY and ABL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KEY and ABL, you can compare the effects of market volatilities on KEY and ABL 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 KEY with a short position of ABL. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEY and ABL.
Diversification Opportunities for KEY and ABL
Very good diversification
The 3 months correlation between KEY and ABL is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding KEY and ABL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABL and KEY 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 KEY are associated (or correlated) with ABL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABL has no effect on the direction of KEY i.e., KEY and ABL go up and down completely randomly.
Pair Corralation between KEY and ABL
If you would invest 1.58 in ABL on September 4, 2024 and sell it today you would earn a total of 0.00 from holding ABL or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
KEY vs. ABL
Performance |
| Timeline |
| KEY |
| ABL |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KEY and ABL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEY and ABL
The main advantage of trading using opposite KEY and ABL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEY position performs unexpectedly, ABL 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 ABL will offset losses from the drop in ABL's long position.The idea behind KEY and ABL 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.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |