Correlation Between First Abacus and Dito CME

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

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

Diversification Opportunities for First Abacus and Dito CME

0.36

Correlation Coefficient

First Abacus  Dito CME

Weak diversification

The 3 months correlation between First and Dito is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Abacus Financial and Dito CME Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dito CME Holdings and First Abacus 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 First Abacus Financial are associated (or correlated) with Dito CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dito CME Holdings has no effect on the direction of First Abacus i.e., First Abacus and Dito CME go up and down completely randomly.

Pair Corralation between First Abacus and Dito CME

Assuming the 90 days trading horizon First Abacus Financial is expected to under-perform the Dito CME. In addition to that, First Abacus is 1.07 times more volatile than Dito CME Holdings. It trades about -0.03 of its total potential returns per unit of risk. Dito CME Holdings is currently generating about 0.02 per unit of volatility. If you would invest  157.00  in Dito CME Holdings on December 1, 2024 and sell it today you would lose (4.00) from holding Dito CME Holdings or give up 2.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	42.37%
Values	Daily Returns

First Abacus Financial  vs.  Dito CME Holdings

First Abacus Financial

Risk-Adjusted Performance

Very 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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Dito CME Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dito CME Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Dito CME may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with First Abacus and Dito CME

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

The idea behind First Abacus Financial and Dito CME Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.