Correlation Between Top Frontier and First Abacus

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

By analyzing existing cross correlation between Top Frontier Investment and First Abacus Financial, you can compare the effects of market volatilities on Top Frontier and First Abacus 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 Top Frontier with a short position of First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Frontier and First Abacus.

Diversification Opportunities for Top Frontier and First Abacus

-0.22

Correlation Coefficient

Top Frontier  First Abacus

Very good diversification

The 3 months correlation between Top and First is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial and Top Frontier 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 Top Frontier Investment are associated (or correlated) with First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Top Frontier i.e., Top Frontier and First Abacus go up and down completely randomly.

Pair Corralation between Top Frontier and First Abacus

Assuming the 90 days trading horizon Top Frontier Investment is expected to under-perform the First Abacus. But the stock apears to be less risky and, when comparing its historical volatility, Top Frontier Investment is 1.38 times less risky than First Abacus. The stock trades about -0.03 of its potential returns per unit of risk. The First Abacus Financial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  60.00  in First Abacus Financial on October 9, 2024 and sell it today you would earn a total of  2.00  from holding First Abacus Financial or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	22.43%
Values	Daily Returns

Top Frontier Investment  vs.  First Abacus Financial

Top Frontier Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Top Frontier Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Top Frontier may actually be approaching a critical reversion point that can send shares even higher in February 2025.

First Abacus Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Abacus Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Top Frontier and First Abacus

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

The idea behind Top Frontier Investment and First Abacus Financial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.