Correlation Between Investec Emerging and Ab Global

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

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

Diversification Opportunities for Investec Emerging and Ab Global

0.35

Correlation Coefficient

Investec Emerging  Ab Global

Weak diversification

The 3 months correlation between Investec and CBSYX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Ab Global Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Risk and Investec Emerging 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 Investec Emerging Markets are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Risk has no effect on the direction of Investec Emerging i.e., Investec Emerging and Ab Global go up and down completely randomly.

Pair Corralation between Investec Emerging and Ab Global

Assuming the 90 days horizon Investec Emerging Markets is expected to generate 0.98 times more return on investment than Ab Global. However, Investec Emerging Markets is 1.02 times less risky than Ab Global. It trades about 0.04 of its potential returns per unit of risk. Ab Global Risk is currently generating about -0.01 per unit of risk. If you would invest  934.00  in Investec Emerging Markets on October 4, 2024 and sell it today you would earn a total of  132.00  from holding Investec Emerging Markets or generate 14.13% return on investment over 90 days.

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

Investec Emerging Markets  vs.  Ab Global Risk

Investec Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ab Global Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Global Risk 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 basic 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.

Pair Trading with Investec Emerging and Ab Global

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

The idea behind Investec Emerging Markets and Ab Global Risk 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.