Correlation Between Dito CME and First Abacus

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

By analyzing existing cross correlation between Dito CME Holdings and First Abacus Financial, you can compare the effects of market volatilities on Dito CME and First Abacus 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 Dito CME with a short position of First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dito CME and First Abacus.

Diversification Opportunities for Dito CME and First Abacus

0.08

Correlation Coefficient

Dito CME  First Abacus

Significant diversification

The 3 months correlation between Dito and First is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dito CME Holdings and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial and Dito CME 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 Dito CME Holdings are associated (or correlated) with First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Dito CME i.e., Dito CME and First Abacus go up and down completely randomly.

Pair Corralation between Dito CME and First Abacus

Assuming the 90 days trading horizon Dito CME Holdings is expected to under-perform the First Abacus. But the stock apears to be less risky and, when comparing its historical volatility, Dito CME Holdings is 1.36 times less risky than First Abacus. The stock trades about -0.16 of its potential returns per unit of risk. The First Abacus Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  62.00  in First Abacus Financial on December 30, 2024 and sell it today you would earn a total of  0.00  from holding First Abacus Financial or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	30.65%
Values	Daily Returns

Dito CME Holdings  vs.  First Abacus Financial

Dito CME Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dito CME Holdings 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

First Abacus Financial

Risk-Adjusted Performance

Weak

Over the last 90 days First Abacus Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, First Abacus may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dito CME and First Abacus

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

The idea behind Dito CME Holdings and First Abacus Financial 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.