Correlation Between Ab Discovery and Ab Global

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

By analyzing existing cross correlation between Ab Discovery Growth and Ab Global E, you can compare the effects of market volatilities on Ab Discovery and Ab Global 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 Discovery with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Discovery and Ab Global.

Diversification Opportunities for Ab Discovery and Ab Global

0.12

Correlation Coefficient

Ab Discovery  Ab Global

Average diversification

The 3 months correlation between CHCLX and GCECX is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ab Discovery Growth and Ab Global E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global E and Ab Discovery 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 Discovery Growth are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global E has no effect on the direction of Ab Discovery i.e., Ab Discovery and Ab Global go up and down completely randomly.

Pair Corralation between Ab Discovery and Ab Global

Assuming the 90 days horizon Ab Discovery Growth is expected to under-perform the Ab Global. In addition to that, Ab Discovery is 1.74 times more volatile than Ab Global E. It trades about -0.15 of its total potential returns per unit of risk. Ab Global E is currently generating about 0.08 per unit of volatility. If you would invest  1,648  in Ab Global E on December 20, 2024 and sell it today you would earn a total of  64.00  from holding Ab Global E or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Ab Discovery Growth  vs.  Ab Global E

Ab Discovery Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ab Discovery Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ab Global E

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global E are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ab Global 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 Discovery and Ab Global

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

The idea behind Ab Discovery Growth and Ab Global E 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.