Correlation Between AB International and Fernhill Corp

Can any of the company-specific risk be diversified away by investing in both AB International and Fernhill Corp 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 Fernhill Corp 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 Fernhill Corp, you can compare the effects of market volatilities on AB International and Fernhill Corp 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 Fernhill Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB International and Fernhill Corp.

Diversification Opportunities for AB International and Fernhill Corp

0.54

Correlation Coefficient

AB International  Fernhill Corp

Very weak diversification

The 3 months correlation between ABQQ and Fernhill is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding AB International Group and Fernhill Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fernhill Corp 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 Fernhill Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fernhill Corp has no effect on the direction of AB International i.e., AB International and Fernhill Corp go up and down completely randomly.

Pair Corralation between AB International and Fernhill Corp

Given the investment horizon of 90 days AB International Group is expected to under-perform the Fernhill Corp. In addition to that, AB International is 1.41 times more volatile than Fernhill Corp. It trades about -0.02 of its total potential returns per unit of risk. Fernhill Corp is currently generating about -0.01 per unit of volatility. If you would invest  0.06  in Fernhill Corp on December 20, 2024 and sell it today you would lose (0.03) from holding Fernhill Corp or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

AB International Group  vs.  Fernhill Corp

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 inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Fernhill Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fernhill Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with AB International and Fernhill Corp

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

The idea behind AB International Group and Fernhill Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.