Correlation Between ABC Arbitrage and Deezer SA

Can any of the company-specific risk be diversified away by investing in both ABC Arbitrage and Deezer 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 ABC Arbitrage and Deezer SA 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 Deezer SA, you can compare the effects of market volatilities on ABC Arbitrage and Deezer 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 ABC Arbitrage with a short position of Deezer SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABC Arbitrage and Deezer SA.

Diversification Opportunities for ABC Arbitrage and Deezer SA

-0.56

Correlation Coefficient

ABC Arbitrage  Deezer SA

Excellent diversification

The 3 months correlation between ABC and Deezer is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ABC arbitrage SA and Deezer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deezer 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 Deezer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deezer SA has no effect on the direction of ABC Arbitrage i.e., ABC Arbitrage and Deezer SA go up and down completely randomly.

Pair Corralation between ABC Arbitrage and Deezer SA

Assuming the 90 days trading horizon ABC arbitrage SA is expected to generate 0.41 times more return on investment than Deezer SA. However, ABC arbitrage SA is 2.41 times less risky than Deezer SA. It trades about -0.02 of its potential returns per unit of risk. Deezer SA is currently generating about -0.03 per unit of risk. If you would invest  566.00  in ABC arbitrage SA on September 28, 2024 and sell it today you would lose (95.00) from holding ABC arbitrage SA or give up 16.78% of portfolio value over 90 days.

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

ABC arbitrage SA  vs.  Deezer SA

ABC arbitrage SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ABC arbitrage SA are ranked lower than 7 (%) 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.

Deezer SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deezer 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.

Pair Trading with ABC Arbitrage and Deezer SA

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

The idea behind ABC arbitrage SA and Deezer 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 Commodity Directory module to find actively traded commodities issued by global exchanges.