Correlation Between A1 and Buildablock Corp

Can any of the company-specific risk be diversified away by investing in both A1 and Buildablock Corp 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 A1 and Buildablock Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A1 Group and Buildablock Corp, you can compare the effects of market volatilities on A1 and Buildablock Corp 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 A1 with a short position of Buildablock Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1 and Buildablock Corp.

Diversification Opportunities for A1 and Buildablock Corp

-0.09

Correlation Coefficient

A1  Buildablock Corp

Good diversification

The 3 months correlation between A1 and Buildablock is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding A1 Group and Buildablock Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buildablock Corp and A1 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 A1 Group are associated (or correlated) with Buildablock Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buildablock Corp has no effect on the direction of A1 i.e., A1 and Buildablock Corp go up and down completely randomly.

Pair Corralation between A1 and Buildablock Corp

Given the investment horizon of 90 days A1 is expected to generate 200.64 times less return on investment than Buildablock Corp. But when comparing it to its historical volatility, A1 Group is 23.05 times less risky than Buildablock Corp. It trades about 0.04 of its potential returns per unit of risk. Buildablock Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1.84  in Buildablock Corp on October 3, 2024 and sell it today you would earn a total of  58.16  from holding Buildablock Corp or generate 3160.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.27%
Values	Daily Returns

A1 Group  vs.  Buildablock Corp

A1 Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A1 Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Buildablock Corp

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Buildablock Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite sluggish fundamental drivers, Buildablock Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with A1 and Buildablock Corp

The main advantage of trading using opposite A1 and Buildablock Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1 position performs unexpectedly, Buildablock Corp 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 Buildablock Corp will offset losses from the drop in Buildablock Corp's long position.

The idea behind A1 Group and Buildablock Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.