Correlation Between ABG Acquisition and Crimson Wine

Can any of the company-specific risk be diversified away by investing in both ABG Acquisition and Crimson Wine 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 ABG Acquisition and Crimson Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ABG Acquisition I and Crimson Wine, you can compare the effects of market volatilities on ABG Acquisition and Crimson Wine 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 ABG Acquisition with a short position of Crimson Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABG Acquisition and Crimson Wine.

Diversification Opportunities for ABG Acquisition and Crimson Wine

0.0

Correlation Coefficient

ABG Acquisition  Crimson Wine

Pay attention - limited upside

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

Pair Corralation between ABG Acquisition and Crimson Wine

If you would invest (100.00) in ABG Acquisition I on December 18, 2024 and sell it today you would earn a total of  100.00  from holding ABG Acquisition I or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ABG Acquisition I  vs.  Crimson Wine

ABG Acquisition I

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABG Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, ABG Acquisition is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Crimson Wine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crimson Wine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with ABG Acquisition and Crimson Wine

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

The idea behind ABG Acquisition I and Crimson Wine 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.