Correlation Between AB International and ProntoForms

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

Diversification Opportunities for AB International and ProntoForms

0.0

Correlation Coefficient

AB International  ProntoForms

Pay attention - limited upside

The 3 months correlation between ABQQ and ProntoForms is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AB International Group and ProntoForms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProntoForms 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 ProntoForms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProntoForms has no effect on the direction of AB International i.e., AB International and ProntoForms go up and down completely randomly.

Pair Corralation between AB International and ProntoForms

If you would invest  0.08  in AB International Group on December 29, 2024 and sell it today you would lose (0.05) from holding AB International Group or give up 62.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AB International Group  vs.  ProntoForms

AB International

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AB International Group are ranked lower than 6 (%) 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.

ProntoForms

Risk-Adjusted Performance

Very Weak

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

Pair Trading with AB International and ProntoForms

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

The idea behind AB International Group and ProntoForms 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.