Correlation Between ABC Arbitrage and Groupe Guillin

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Can any of the company-specific risk be diversified away by investing in both ABC Arbitrage and Groupe Guillin 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 ABC Arbitrage and Groupe Guillin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABC arbitrage SA and Groupe Guillin SA, you can compare the effects of market volatilities on ABC Arbitrage and Groupe Guillin 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 ABC Arbitrage with a short position of Groupe Guillin. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABC Arbitrage and Groupe Guillin.

Diversification Opportunities for ABC Arbitrage and Groupe Guillin

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ABC and Groupe is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ABC arbitrage SA and Groupe Guillin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Guillin SA and ABC Arbitrage 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 ABC arbitrage SA are associated (or correlated) with Groupe Guillin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Guillin SA has no effect on the direction of ABC Arbitrage i.e., ABC Arbitrage and Groupe Guillin go up and down completely randomly.

Pair Corralation between ABC Arbitrage and Groupe Guillin

Assuming the 90 days trading horizon ABC arbitrage SA is expected to under-perform the Groupe Guillin. But the stock apears to be less risky and, when comparing its historical volatility, ABC arbitrage SA is 1.4 times less risky than Groupe Guillin. The stock trades about -0.06 of its potential returns per unit of risk. The Groupe Guillin SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,685  in Groupe Guillin SA on September 18, 2024 and sell it today you would earn a total of  10.00  from holding Groupe Guillin SA or generate 0.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ABC arbitrage SA  vs.  Groupe Guillin SA

 Performance 
       Timeline  
ABC arbitrage SA 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ABC arbitrage SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ABC Arbitrage may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Groupe Guillin SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Groupe Guillin SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

ABC Arbitrage and Groupe Guillin Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ABC Arbitrage and Groupe Guillin

The main advantage of trading using opposite ABC Arbitrage and Groupe Guillin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABC Arbitrage position performs unexpectedly, Groupe Guillin 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 Groupe Guillin will offset losses from the drop in Groupe Guillin's long position.
The idea behind ABC arbitrage SA and Groupe Guillin SA 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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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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