Correlation Between Associated British and Las Vegas

Can any of the company-specific risk be diversified away by investing in both Associated British and Las Vegas 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 Associated British and Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated British Foods and Las Vegas Sands, you can compare the effects of market volatilities on Associated British and Las Vegas 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 Associated British with a short position of Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Las Vegas.

Diversification Opportunities for Associated British and Las Vegas

0.92

Correlation Coefficient

Associated British  Las Vegas

Almost no diversification

The 3 months correlation between Associated and Las is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands and Associated British 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 Associated British Foods are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Associated British i.e., Associated British and Las Vegas go up and down completely randomly.

Pair Corralation between Associated British and Las Vegas

Assuming the 90 days trading horizon Associated British Foods is expected to generate 0.63 times more return on investment than Las Vegas. However, Associated British Foods is 1.58 times less risky than Las Vegas. It trades about -0.18 of its potential returns per unit of risk. Las Vegas Sands is currently generating about -0.14 per unit of risk. If you would invest  221,043  in Associated British Foods on December 1, 2024 and sell it today you would lose (31,543) from holding Associated British Foods or give up 14.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Associated British Foods  vs.  Las Vegas Sands

Associated British Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Associated British Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Las Vegas Sands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Las Vegas Sands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Associated British and Las Vegas

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

The idea behind Associated British Foods and Las Vegas Sands 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.