Correlation Between ABBC and BEZ

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both ABBC and BEZ 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 ABBC and BEZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABBC and BEZ, you can compare the effects of market volatilities on ABBC and BEZ 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 ABBC with a short position of BEZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABBC and BEZ.

Diversification Opportunities for ABBC and BEZ

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between ABBC and BEZ is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding ABBC and BEZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEZ and ABBC 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 ABBC are associated (or correlated) with BEZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEZ has no effect on the direction of ABBC i.e., ABBC and BEZ go up and down completely randomly.

Pair Corralation between ABBC and BEZ

Assuming the 90 days trading horizon ABBC is expected to under-perform the BEZ. But the crypto coin apears to be less risky and, when comparing its historical volatility, ABBC is 11.93 times less risky than BEZ. The crypto coin trades about -0.02 of its potential returns per unit of risk. The BEZ is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.42  in BEZ on December 29, 2023 and sell it today you would earn a total of  23.58  from holding BEZ or generate 5573.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy49.42%
ValuesDaily Returns

ABBC  vs.  BEZ

 Performance 
       Timeline  
ABBC 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days ABBC 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 Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for ABBC shareholders.
BEZ 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days BEZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BEZ is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ABBC and BEZ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ABBC and BEZ

The main advantage of trading using opposite ABBC and BEZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABBC position performs unexpectedly, BEZ 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 BEZ will offset losses from the drop in BEZ's long position.
The idea behind ABBC and BEZ 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

Other Complementary Tools

Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity