Correlation Between Absolute Convertible and Science Technology

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Science Technology 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 Absolute Convertible and Science Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Science Technology Fund, you can compare the effects of market volatilities on Absolute Convertible and Science Technology 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 Absolute Convertible with a short position of Science Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Science Technology.

Diversification Opportunities for Absolute Convertible and Science Technology

0.24
  Correlation Coefficient

Modest diversification

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

Pair Corralation between Absolute Convertible and Science Technology

Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to under-perform the Science Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Absolute Convertible Arbitrage is 4.85 times less risky than Science Technology. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Science Technology Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,659  in Science Technology Fund on October 4, 2024 and sell it today you would earn a total of  181.00  from holding Science Technology Fund or generate 6.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Absolute Convertible Arbitrage  vs.  Science Technology Fund

 Performance 
       Timeline  
Absolute Convertible 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Absolute Convertible Arbitrage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Absolute Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Science Technology 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Science Technology Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Science Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Absolute Convertible and Science Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Absolute Convertible and Science Technology

The main advantage of trading using opposite Absolute Convertible and Science Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Science Technology 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 Science Technology will offset losses from the drop in Science Technology's long position.
The idea behind Absolute Convertible Arbitrage and Science Technology Fund 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.
Check out your portfolio center.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

Other Complementary Tools

Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Fundamental Analysis
View fundamental data based on most recent published financial statements
Money Managers
Screen money managers from public funds and ETFs managed around the world
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Volatility Analysis
Get historical volatility and risk analysis based on latest market data