Correlation Between ABL and Chainlink

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

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

Diversification Opportunities for ABL and Chainlink

0.49

Correlation Coefficient

ABL  Chainlink

Very weak diversification

The 3 months correlation between ABL and Chainlink is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ABL and Chainlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainlink and ABL 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 ABL are associated (or correlated) with Chainlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chainlink has no effect on the direction of ABL i.e., ABL and Chainlink go up and down completely randomly.

Pair Corralation between ABL and Chainlink

If you would invest  1,002  in Chainlink on September 4, 2024 and sell it today you would earn a total of  1,494  from holding Chainlink or generate 149.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

ABL  vs.  Chainlink

ABL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, ABL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Chainlink

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Chainlink exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ABL and Chainlink

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

The idea behind ABL and Chainlink 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.