Correlation Between AB International and Imageware Sys

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

Diversification Opportunities for AB International and Imageware Sys

-0.31

Correlation Coefficient

AB International  Imageware Sys

Very good diversification

The 3 months correlation between ABQQ and Imageware is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AB International Group and Imageware Sys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imageware Sys 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 Imageware Sys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imageware Sys has no effect on the direction of AB International i.e., AB International and Imageware Sys go up and down completely randomly.

Pair Corralation between AB International and Imageware Sys

Given the investment horizon of 90 days AB International is expected to generate 1.35 times less return on investment than Imageware Sys. But when comparing it to its historical volatility, AB International Group is 1.41 times less risky than Imageware Sys. It trades about 0.12 of its potential returns per unit of risk. Imageware Sys is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.13  in Imageware Sys on September 10, 2024 and sell it today you would lose (0.03) from holding Imageware Sys or give up 23.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	6.87%
Values	Daily Returns

AB International Group  vs.  Imageware Sys

AB International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AB International Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, AB International reported solid returns over the last few months and may actually be approaching a breakup point.

Imageware Sys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imageware Sys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Imageware Sys is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AB International and Imageware Sys

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

The idea behind AB International Group and Imageware Sys 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.