Correlation Between Ab Small and Johcm International

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

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

Diversification Opportunities for Ab Small and Johcm International

0.39

Correlation Coefficient

Ab Small  Johcm International

Weak diversification

The 3 months correlation between SCYVX and Johcm is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Johcm International Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm International and Ab Small 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 Small Cap are associated (or correlated) with Johcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm International has no effect on the direction of Ab Small i.e., Ab Small and Johcm International go up and down completely randomly.

Pair Corralation between Ab Small and Johcm International

Assuming the 90 days horizon Ab Small Cap is expected to under-perform the Johcm International. In addition to that, Ab Small is 1.17 times more volatile than Johcm International Opportunities. It trades about -0.19 of its total potential returns per unit of risk. Johcm International Opportunities is currently generating about 0.04 per unit of volatility. If you would invest  1,254  in Johcm International Opportunities on December 2, 2024 and sell it today you would earn a total of  27.00  from holding Johcm International Opportunities or generate 2.15% return on investment over 90 days.

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

Ab Small Cap  vs.  Johcm International Opportunit

Ab Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ab Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Johcm International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Johcm International Opportunities are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Johcm International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Small and Johcm International

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

The idea behind Ab Small Cap and Johcm International Opportunities 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .