Correlation Between Abacus Life, and Tapestry

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

By analyzing existing cross correlation between Abacus Life, 9875 and Tapestry, you can compare the effects of market volatilities on Abacus Life, and Tapestry 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 Abacus Life, with a short position of Tapestry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abacus Life, and Tapestry.

Diversification Opportunities for Abacus Life, and Tapestry

0.53

Correlation Coefficient

Abacus Life,  Tapestry

Very weak diversification

The 3 months correlation between Abacus and Tapestry is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life, 9875 and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry and Abacus Life, 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 Abacus Life, 9875 are associated (or correlated) with Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of Abacus Life, i.e., Abacus Life, and Tapestry go up and down completely randomly.

Pair Corralation between Abacus Life, and Tapestry

Assuming the 90 days horizon Abacus Life, 9875 is expected to generate 3.84 times more return on investment than Tapestry. However, Abacus Life, is 3.84 times more volatile than Tapestry. It trades about 0.1 of its potential returns per unit of risk. Tapestry is currently generating about 0.32 per unit of risk. If you would invest  2,700  in Abacus Life, 9875 on October 9, 2024 and sell it today you would earn a total of  225.00  from holding Abacus Life, 9875 or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Abacus Life, 9875  vs.  Tapestry

Abacus Life, 9875

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abacus Life, 9875 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Abacus Life, disclosed solid returns over the last few months and may actually be approaching a breakup point.

Tapestry

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tapestry are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Tapestry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abacus Life, and Tapestry

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

The idea behind Abacus Life, 9875 and Tapestry 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.