Correlation Between Fernhill Corp and AB International

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

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

Diversification Opportunities for Fernhill Corp and AB International

0.54

Correlation Coefficient

Fernhill Corp  AB International

Very weak diversification

The 3 months correlation between Fernhill and ABQQ is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fernhill 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 Fernhill Corp 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 Fernhill 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 Fernhill Corp i.e., Fernhill Corp and AB International go up and down completely randomly.

Pair Corralation between Fernhill Corp and AB International

Given the investment horizon of 90 days Fernhill Corp is expected to generate 0.71 times more return on investment than AB International. However, Fernhill Corp is 1.41 times less risky than AB International. It trades about -0.01 of its potential returns per unit of risk. AB International Group is currently generating about -0.02 per unit of risk. If you would invest  0.06  in Fernhill Corp on December 20, 2024 and sell it today you would lose (0.03) from holding Fernhill Corp or give up 50.0% of portfolio value over 90 days.

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

Fernhill Corp  vs.  AB International Group

Fernhill Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fernhill Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

AB International

Risk-Adjusted Performance

Very Weak

Over the last 90 days AB International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Fernhill Corp and AB International

The main advantage of trading using opposite Fernhill Corp and AB International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fernhill Corp 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 Fernhill 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..