Correlation Between Acesite Hotel and First Abacus

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

By analyzing existing cross correlation between Acesite Hotel Corp and First Abacus Financial, you can compare the effects of market volatilities on Acesite Hotel and First Abacus 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 Acesite Hotel with a short position of First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acesite Hotel and First Abacus.

Diversification Opportunities for Acesite Hotel and First Abacus

0.24

Correlation Coefficient

Acesite Hotel  First Abacus

Modest diversification

The 3 months correlation between Acesite and First is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Acesite Hotel Corp and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial and Acesite Hotel 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 Acesite Hotel Corp are associated (or correlated) with First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Acesite Hotel i.e., Acesite Hotel and First Abacus go up and down completely randomly.

Pair Corralation between Acesite Hotel and First Abacus

Assuming the 90 days trading horizon Acesite Hotel Corp is expected to under-perform the First Abacus. In addition to that, Acesite Hotel is 1.54 times more volatile than First Abacus Financial. It trades about -0.09 of its total potential returns per unit of risk. First Abacus Financial is currently generating about -0.02 per unit of volatility. If you would invest  63.00  in First Abacus Financial on October 20, 2024 and sell it today you would lose (3.00) from holding First Abacus Financial or give up 4.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Acesite Hotel Corp  vs.  First Abacus Financial

Acesite Hotel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acesite Hotel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

First Abacus Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Abacus Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Acesite Hotel and First Abacus

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

The idea behind Acesite Hotel Corp and First Abacus Financial 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.