Correlation Between Associated British and Ikigai Ventures

Can any of the company-specific risk be diversified away by investing in both Associated British and Ikigai Ventures 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 Ikigai Ventures 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 Ikigai Ventures, you can compare the effects of market volatilities on Associated British and Ikigai Ventures 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 Ikigai Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Ikigai Ventures.

Diversification Opportunities for Associated British and Ikigai Ventures

0.16

Correlation Coefficient

Associated British  Ikigai Ventures

Average diversification

The 3 months correlation between Associated and Ikigai is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Ikigai Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ikigai Ventures 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 Ikigai Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ikigai Ventures has no effect on the direction of Associated British i.e., Associated British and Ikigai Ventures go up and down completely randomly.

Pair Corralation between Associated British and Ikigai Ventures

Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Ikigai Ventures. In addition to that, Associated British is 5.52 times more volatile than Ikigai Ventures. It trades about -0.04 of its total potential returns per unit of risk. Ikigai Ventures is currently generating about -0.02 per unit of volatility. If you would invest  4,550  in Ikigai Ventures on October 22, 2024 and sell it today you would lose (50.00) from holding Ikigai Ventures or give up 1.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Associated British Foods  vs.  Ikigai Ventures

Associated British Foods

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ikigai Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Associated British and Ikigai Ventures

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

The idea behind Associated British Foods and Ikigai Ventures 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.