Correlation Between Blackline Safety and AB International

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

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

Diversification Opportunities for Blackline Safety and AB International

-0.13

Correlation Coefficient

Blackline Safety  AB International

Good diversification

The 3 months correlation between Blackline and ABQQ is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Blackline Safety Corp and AB International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB International and Blackline Safety 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 Blackline Safety Corp are associated (or correlated) with AB International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB International has no effect on the direction of Blackline Safety i.e., Blackline Safety and AB International go up and down completely randomly.

Pair Corralation between Blackline Safety and AB International

Assuming the 90 days horizon Blackline Safety is expected to generate 39.28 times less return on investment than AB International. But when comparing it to its historical volatility, Blackline Safety Corp is 12.89 times less risky than AB International. It trades about 0.03 of its potential returns per unit of risk. AB International Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.08  in AB International Group on December 29, 2024 and sell it today you would lose (0.05) from holding AB International Group or give up 62.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Blackline Safety Corp  vs.  AB International Group

Blackline Safety Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline Safety Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Blackline Safety is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AB International

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AB International Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, AB International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackline Safety and AB International

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

The idea behind Blackline Safety Corp and AB International Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.