Correlation Between Ab Global and Ab International

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

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

Diversification Opportunities for Ab Global and Ab International

0.72

Correlation Coefficient

Ab Global  Ab International

Poor diversification

The 3 months correlation between GCEYX and ABICX is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E and Ab International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab International Value and Ab Global 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 Global E 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 Value has no effect on the direction of Ab Global i.e., Ab Global and Ab International go up and down completely randomly.

Pair Corralation between Ab Global and Ab International

Assuming the 90 days horizon Ab Global is expected to generate 5.3 times less return on investment than Ab International. In addition to that, Ab Global is 1.01 times more volatile than Ab International Value. It trades about 0.04 of its total potential returns per unit of risk. Ab International Value is currently generating about 0.2 per unit of volatility. If you would invest  1,364  in Ab International Value on December 28, 2024 and sell it today you would earn a total of  149.00  from holding Ab International Value or generate 10.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ab Global E  vs.  Ab International Value

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 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab International Value

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab International Value are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ab International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ab Global and Ab International

The main advantage of trading using opposite Ab Global and Ab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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 Ab Global E and Ab International Value 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.