Correlation Between Life Time and Abpro Holdings

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

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

Diversification Opportunities for Life Time and Abpro Holdings

0.46

Correlation Coefficient

Life Time  Abpro Holdings

Very weak diversification

The 3 months correlation between Life and Abpro is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Abpro Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abpro Holdings and Life Time 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 Life Time Group are associated (or correlated) with Abpro Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abpro Holdings has no effect on the direction of Life Time i.e., Life Time and Abpro Holdings go up and down completely randomly.

Pair Corralation between Life Time and Abpro Holdings

Considering the 90-day investment horizon Life Time is expected to generate 2.12 times less return on investment than Abpro Holdings. But when comparing it to its historical volatility, Life Time Group is 11.17 times less risky than Abpro Holdings. It trades about 0.24 of its potential returns per unit of risk. Abpro Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.95  in Abpro Holdings on December 19, 2024 and sell it today you would lose (1.89) from holding Abpro Holdings or give up 38.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	61.67%
Values	Daily Returns

Life Time Group  vs.  Abpro Holdings

Life Time Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Life Time Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Life Time demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Abpro Holdings

Risk-Adjusted Performance

Insignificant

Over the last 90 days Abpro Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile basic indicators, Abpro Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Life Time and Abpro Holdings

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

The idea behind Life Time Group and Abpro 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.