Correlation Between Ablerex Electronics and Louisa Professional

Can any of the company-specific risk be diversified away by investing in both Ablerex Electronics and Louisa Professional 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 Ablerex Electronics and Louisa Professional into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ablerex Electronics Co and Louisa Professional Coffee, you can compare the effects of market volatilities on Ablerex Electronics and Louisa Professional 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 Ablerex Electronics with a short position of Louisa Professional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ablerex Electronics and Louisa Professional.

Diversification Opportunities for Ablerex Electronics and Louisa Professional

-0.43

Correlation Coefficient

Ablerex Electronics  Louisa Professional

Very good diversification

The 3 months correlation between Ablerex and Louisa is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ablerex Electronics Co and Louisa Professional Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Louisa Professional and Ablerex Electronics 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 Ablerex Electronics Co are associated (or correlated) with Louisa Professional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Louisa Professional has no effect on the direction of Ablerex Electronics i.e., Ablerex Electronics and Louisa Professional go up and down completely randomly.

Pair Corralation between Ablerex Electronics and Louisa Professional

Assuming the 90 days trading horizon Ablerex Electronics Co is expected to under-perform the Louisa Professional. But the stock apears to be less risky and, when comparing its historical volatility, Ablerex Electronics Co is 1.51 times less risky than Louisa Professional. The stock trades about -0.1 of its potential returns per unit of risk. The Louisa Professional Coffee is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  8,484  in Louisa Professional Coffee on December 22, 2024 and sell it today you would earn a total of  2,866  from holding Louisa Professional Coffee or generate 33.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ablerex Electronics Co  vs.  Louisa Professional Coffee

Ablerex Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ablerex Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Louisa Professional

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Louisa Professional Coffee are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Louisa Professional showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ablerex Electronics and Louisa Professional

The main advantage of trading using opposite Ablerex Electronics and Louisa Professional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ablerex Electronics position performs unexpectedly, Louisa Professional 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 Louisa Professional will offset losses from the drop in Louisa Professional's long position.

The idea behind Ablerex Electronics Co and Louisa Professional Coffee 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.