Correlation Between ABACUS STORAGE and Aristocrat Leisure

Can any of the company-specific risk be diversified away by investing in both ABACUS STORAGE and Aristocrat Leisure 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 ABACUS STORAGE and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ABACUS STORAGE KING and Aristocrat Leisure, you can compare the effects of market volatilities on ABACUS STORAGE and Aristocrat Leisure 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 ABACUS STORAGE with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABACUS STORAGE and Aristocrat Leisure.

Diversification Opportunities for ABACUS STORAGE and Aristocrat Leisure

0.59

Correlation Coefficient

ABACUS STORAGE  Aristocrat Leisure

Very weak diversification

The 3 months correlation between ABACUS and Aristocrat is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ABACUS STORAGE KING and Aristocrat Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and ABACUS STORAGE 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 ABACUS STORAGE KING are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of ABACUS STORAGE i.e., ABACUS STORAGE and Aristocrat Leisure go up and down completely randomly.

Pair Corralation between ABACUS STORAGE and Aristocrat Leisure

Assuming the 90 days trading horizon ABACUS STORAGE is expected to generate 4.14 times less return on investment than Aristocrat Leisure. But when comparing it to its historical volatility, ABACUS STORAGE KING is 1.07 times less risky than Aristocrat Leisure. It trades about 0.02 of its potential returns per unit of risk. Aristocrat Leisure is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,819  in Aristocrat Leisure on December 1, 2024 and sell it today you would earn a total of  391.00  from holding Aristocrat Leisure or generate 5.73% return on investment over 90 days.

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

ABACUS STORAGE KING  vs.  Aristocrat Leisure

ABACUS STORAGE KING

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ABACUS STORAGE KING are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, ABACUS STORAGE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aristocrat Leisure

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Leisure are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Aristocrat Leisure may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ABACUS STORAGE and Aristocrat Leisure

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

The idea behind ABACUS STORAGE KING and Aristocrat Leisure 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.