Correlation Between ABM Industries and ATIF Holdings

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

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

Diversification Opportunities for ABM Industries and ATIF Holdings

-0.76

Correlation Coefficient

ABM Industries  ATIF Holdings

Pay attention - limited upside

The 3 months correlation between ABM and ATIF is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ABM Industries Incorporated and ATIF Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATIF Holdings and ABM Industries 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 ABM Industries Incorporated are associated (or correlated) with ATIF Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATIF Holdings has no effect on the direction of ABM Industries i.e., ABM Industries and ATIF Holdings go up and down completely randomly.

Pair Corralation between ABM Industries and ATIF Holdings

Considering the 90-day investment horizon ABM Industries Incorporated is expected to generate 0.2 times more return on investment than ATIF Holdings. However, ABM Industries Incorporated is 4.95 times less risky than ATIF Holdings. It trades about 0.11 of its potential returns per unit of risk. ATIF Holdings is currently generating about -0.09 per unit of risk. If you would invest  5,418  in ABM Industries Incorporated on September 5, 2024 and sell it today you would earn a total of  207.00  from holding ABM Industries Incorporated or generate 3.82% return on investment over 90 days.

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

ABM Industries Incorporated  vs.  ATIF Holdings

ABM Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ABM Industries Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, ABM Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ATIF Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days ATIF Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, ATIF Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ABM Industries and ATIF Holdings

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

The idea behind ABM Industries Incorporated and ATIF Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.