Correlation Between Aston/river Road and Ab Select

Can any of the company-specific risk be diversified away by investing in both Aston/river Road and Ab Select 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 Aston/river Road and Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astonriver Road Independent and Ab Select Longshort, you can compare the effects of market volatilities on Aston/river Road and Ab Select 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 Aston/river Road with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aston/river Road and Ab Select.

Diversification Opportunities for Aston/river Road and Ab Select

0.28

Correlation Coefficient

Aston/river Road  Ab Select

Modest diversification

The 3 months correlation between Aston/river and ASCLX is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Astonriver Road Independent and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort and Aston/river Road 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 Astonriver Road Independent are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of Aston/river Road i.e., Aston/river Road and Ab Select go up and down completely randomly.

Pair Corralation between Aston/river Road and Ab Select

Assuming the 90 days horizon Aston/river Road is expected to generate 1.67 times less return on investment than Ab Select. In addition to that, Aston/river Road is 1.68 times more volatile than Ab Select Longshort. It trades about 0.02 of its total potential returns per unit of risk. Ab Select Longshort is currently generating about 0.06 per unit of volatility. If you would invest  1,081  in Ab Select Longshort on October 4, 2024 and sell it today you would earn a total of  203.00  from holding Ab Select Longshort or generate 18.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Astonriver Road Independent  vs.  Ab Select Longshort

Astonriver Road Inde

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astonriver Road Independent has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ab Select Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Select Longshort has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Ab Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aston/river Road and Ab Select

The main advantage of trading using opposite Aston/river Road and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aston/river Road position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.

The idea behind Astonriver Road Independent and Ab Select Longshort 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.