Correlation Between ABM Industries and E Home

Can any of the company-specific risk be diversified away by investing in both ABM Industries and E Home 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 ABM Industries and E Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ABM Industries Incorporated and E Home Household Service, you can compare the effects of market volatilities on ABM Industries and E Home 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 ABM Industries with a short position of E Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABM Industries and E Home.

Diversification Opportunities for ABM Industries and E Home

0.11

Correlation Coefficient

ABM Industries  E Home

Average diversification

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

Pair Corralation between ABM Industries and E Home

Considering the 90-day investment horizon ABM Industries is expected to generate 13.55 times less return on investment than E Home. But when comparing it to its historical volatility, ABM Industries Incorporated is 4.74 times less risky than E Home. It trades about 0.01 of its potential returns per unit of risk. E Home Household Service is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  530.00  in E Home Household Service on January 24, 2024 and sell it today you would lose (234.00) from holding E Home Household Service or give up 44.15% of portfolio value over 90 days.

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

ABM Industries Incorporated  vs.  E Home Household Service

ABM Industries rporated

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ABM Industries Incorporated are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental drivers, ABM Industries may actually be approaching a critical reversion point that can send shares even higher in May 2024.

E Home Household

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in E Home Household Service are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward-looking indicators, E Home demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ABM Industries and E Home

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

The idea behind ABM Industries Incorporated and E Home Household Service 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 CEOs Directory module to screen CEOs from public companies around the world.