Correlation Between Northern Star and ABO GROUP

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

By analyzing existing cross correlation between Northern Star Resources and ABO GROUP ENVIRONMENT, you can compare the effects of market volatilities on Northern Star and ABO GROUP 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 Northern Star with a short position of ABO GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and ABO GROUP.

Diversification Opportunities for Northern Star and ABO GROUP

-0.03

Correlation Coefficient

Northern Star  ABO GROUP

Good diversification

The 3 months correlation between Northern and ABO is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and ABO GROUP ENVIRONMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABO GROUP ENVIRONMENT and Northern Star 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 Northern Star Resources are associated (or correlated) with ABO GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABO GROUP ENVIRONMENT has no effect on the direction of Northern Star i.e., Northern Star and ABO GROUP go up and down completely randomly.

Pair Corralation between Northern Star and ABO GROUP

Assuming the 90 days horizon Northern Star Resources is expected to under-perform the ABO GROUP. In addition to that, Northern Star is 1.43 times more volatile than ABO GROUP ENVIRONMENT. It trades about -0.17 of its total potential returns per unit of risk. ABO GROUP ENVIRONMENT is currently generating about -0.14 per unit of volatility. If you would invest  505.00  in ABO GROUP ENVIRONMENT on September 20, 2024 and sell it today you would lose (23.00) from holding ABO GROUP ENVIRONMENT or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Northern Star Resources  vs.  ABO GROUP ENVIRONMENT

Northern Star Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Star Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Northern Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ABO GROUP ENVIRONMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABO GROUP ENVIRONMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Northern Star and ABO GROUP

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

The idea behind Northern Star Resources and ABO GROUP ENVIRONMENT 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.