Correlation Between ABC TRANSPORT and STANDARD ALLIANCE

Can any of the company-specific risk be diversified away by investing in both ABC TRANSPORT and STANDARD ALLIANCE 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 TRANSPORT and STANDARD ALLIANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ABC TRANSPORT PLC and STANDARD ALLIANCE INSURANCE, you can compare the effects of market volatilities on ABC TRANSPORT and STANDARD ALLIANCE 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 TRANSPORT with a short position of STANDARD ALLIANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABC TRANSPORT and STANDARD ALLIANCE.

Diversification Opportunities for ABC TRANSPORT and STANDARD ALLIANCE

0.0

Correlation Coefficient

ABC TRANSPORT  STANDARD ALLIANCE

Pay attention - limited upside

The 3 months correlation between ABC and STANDARD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ABC TRANSPORT PLC and STANDARD ALLIANCE INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STANDARD ALLIANCE and ABC TRANSPORT 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 TRANSPORT PLC are associated (or correlated) with STANDARD ALLIANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STANDARD ALLIANCE has no effect on the direction of ABC TRANSPORT i.e., ABC TRANSPORT and STANDARD ALLIANCE go up and down completely randomly.

Pair Corralation between ABC TRANSPORT and STANDARD ALLIANCE

If you would invest  28.00  in ABC TRANSPORT PLC on October 10, 2024 and sell it today you would earn a total of  94.00  from holding ABC TRANSPORT PLC or generate 335.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.74%
Values	Daily Returns

ABC TRANSPORT PLC  vs.  STANDARD ALLIANCE INSURANCE

ABC TRANSPORT PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABC TRANSPORT PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ABC TRANSPORT is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

STANDARD ALLIANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STANDARD ALLIANCE INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, STANDARD ALLIANCE is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ABC TRANSPORT and STANDARD ALLIANCE

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

The idea behind ABC TRANSPORT PLC and STANDARD ALLIANCE INSURANCE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.