Correlation Between Ab Select and Riskproreg

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

By analyzing existing cross correlation between Ab Select Equity and Riskproreg 30 Fund, you can compare the effects of market volatilities on Ab Select and Riskproreg 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 Ab Select with a short position of Riskproreg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Riskproreg.

Diversification Opportunities for Ab Select and Riskproreg

0.71

Correlation Coefficient

Ab Select  Riskproreg

Poor diversification

The 3 months correlation between AUUYX and Riskproreg is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Equity and Riskproreg 30 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riskproreg 30 and Ab Select 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 Ab Select Equity are associated (or correlated) with Riskproreg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riskproreg 30 has no effect on the direction of Ab Select i.e., Ab Select and Riskproreg go up and down completely randomly.

Pair Corralation between Ab Select and Riskproreg

Assuming the 90 days horizon Ab Select Equity is expected to generate 0.91 times more return on investment than Riskproreg. However, Ab Select Equity is 1.1 times less risky than Riskproreg. It trades about 0.08 of its potential returns per unit of risk. Riskproreg 30 Fund is currently generating about -0.05 per unit of risk. If you would invest  2,221  in Ab Select Equity on October 23, 2024 and sell it today you would earn a total of  24.00  from holding Ab Select Equity or generate 1.08% return on investment over 90 days.

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

Ab Select Equity  vs.  Riskproreg 30 Fund

Ab Select Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Riskproreg 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riskproreg 30 Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Riskproreg is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Select and Riskproreg

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

The idea behind Ab Select Equity and Riskproreg 30 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.