Can any of the company-specific risk be diversified away by investing in both EEducation Albert and ABAS Protect 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 EEducation Albert and ABAS Protect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eEducation Albert AB and ABAS Protect AB, you can compare the effects of market volatilities on EEducation Albert and ABAS Protect 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 EEducation Albert with a short position of ABAS Protect. Check out your portfolio center. Please also check ongoing floating volatility patterns of EEducation Albert and ABAS Protect.
Diversification Opportunities for EEducation Albert and ABAS Protect
The 3 months correlation between EEducation and ABAS is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding eEducation Albert AB and ABAS Protect AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABAS Protect AB and EEducation Albert 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 eEducation Albert AB are associated (or correlated) with ABAS Protect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABAS Protect AB has no effect on the direction of EEducation Albert i.e., EEducation Albert and ABAS Protect go up and down completely randomly.
Pair Corralation between EEducation Albert and ABAS Protect
Assuming the 90 days trading horizon eEducation Albert AB is expected to under-perform the ABAS Protect. In addition to that, EEducation Albert is 1.3 times more volatile than ABAS Protect AB. It trades about -0.07 of its total potential returns per unit of risk. ABAS Protect AB is currently generating about 0.01 per unit of volatility. If you would invest 996.00 in ABAS Protect AB on March 6, 2024 and sell it today you would lose (86.00) from holding ABAS Protect AB or give up 8.63% of portfolio value over 90 days.
Over the last 90 days eEducation Albert AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EEducation Albert is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Over the last 90 days ABAS Protect AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ABAS Protect is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.