Correlation Between Associated Alcohols and Aban Offshore

Can any of the company-specific risk be diversified away by investing in both Associated Alcohols and Aban Offshore 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 Associated Alcohols and Aban Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Alcohols Breweries and Aban Offshore Limited, you can compare the effects of market volatilities on Associated Alcohols and Aban Offshore 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 Associated Alcohols with a short position of Aban Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Alcohols and Aban Offshore.

Diversification Opportunities for Associated Alcohols and Aban Offshore

0.0

Correlation Coefficient

Associated Alcohols  Aban Offshore

Pay attention - limited upside

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

Pair Corralation between Associated Alcohols and Aban Offshore

Assuming the 90 days trading horizon Associated Alcohols Breweries is expected to generate 0.84 times more return on investment than Aban Offshore. However, Associated Alcohols Breweries is 1.19 times less risky than Aban Offshore. It trades about 0.1 of its potential returns per unit of risk. Aban Offshore Limited is currently generating about 0.03 per unit of risk. If you would invest  40,602  in Associated Alcohols Breweries on October 11, 2024 and sell it today you would earn a total of  77,053  from holding Associated Alcohols Breweries or generate 189.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Associated Alcohols Breweries  vs.  Aban Offshore Limited

Associated Alcohols

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Alcohols Breweries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Associated Alcohols reported solid returns over the last few months and may actually be approaching a breakup point.

Aban Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aban Offshore Limited 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Associated Alcohols and Aban Offshore

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

The idea behind Associated Alcohols Breweries and Aban Offshore Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.