Correlation Between AB International and AirIQ

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

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

Diversification Opportunities for AB International and AirIQ

0.7

Correlation Coefficient

AB International  AirIQ

Poor diversification

The 3 months correlation between ABQQ and AirIQ is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding AB International Group and AirIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirIQ Inc and AB International 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 AB International Group are associated (or correlated) with AirIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirIQ Inc has no effect on the direction of AB International i.e., AB International and AirIQ go up and down completely randomly.

Pair Corralation between AB International and AirIQ

Given the investment horizon of 90 days AB International Group is expected to generate 4.75 times more return on investment than AirIQ. However, AB International is 4.75 times more volatile than AirIQ Inc. It trades about 0.01 of its potential returns per unit of risk. AirIQ Inc is currently generating about -0.05 per unit of risk. If you would invest  0.09  in AB International Group on December 27, 2024 and sell it today you would lose (0.07) from holding AB International Group or give up 77.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

AB International Group  vs.  AirIQ Inc

AB International

Risk-Adjusted Performance

Very Weak

Over the last 90 days AB International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively inconsistent basic indicators, AB International reported solid returns over the last few months and may actually be approaching a breakup point.

AirIQ Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days AirIQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AB International and AirIQ

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

The idea behind AB International Group and AirIQ Inc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.