Correlation Between Emerging Markets and Ab Ohio

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

By analyzing existing cross correlation between The Emerging Markets and Ab Ohio Portfolio, you can compare the effects of market volatilities on Emerging Markets and Ab Ohio 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 Emerging Markets with a short position of Ab Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Ab Ohio.

Diversification Opportunities for Emerging Markets and Ab Ohio

0.52

Correlation Coefficient

Emerging Markets  Ab Ohio

Very weak diversification

The 3 months correlation between Emerging and AOHCX is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Ab Ohio Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Ohio Portfolio and Emerging Markets 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 The Emerging Markets are associated (or correlated) with Ab Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Ohio Portfolio has no effect on the direction of Emerging Markets i.e., Emerging Markets and Ab Ohio go up and down completely randomly.

Pair Corralation between Emerging Markets and Ab Ohio

Assuming the 90 days horizon The Emerging Markets is expected to generate 3.99 times more return on investment than Ab Ohio. However, Emerging Markets is 3.99 times more volatile than Ab Ohio Portfolio. It trades about 0.03 of its potential returns per unit of risk. Ab Ohio Portfolio is currently generating about 0.11 per unit of risk. If you would invest  1,669  in The Emerging Markets on October 5, 2024 and sell it today you would earn a total of  119.00  from holding The Emerging Markets or generate 7.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.68%
Values	Daily Returns

The Emerging Markets  vs.  Ab Ohio Portfolio

Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Emerging Markets 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 primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ab Ohio Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Ohio Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ab Ohio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerging Markets and Ab Ohio

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

The idea behind The Emerging Markets and Ab Ohio Portfolio 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.