Correlation Between Ab Value and Optimum Small-mid

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

By analyzing existing cross correlation between Ab Value Fund and Optimum Small Mid Cap, you can compare the effects of market volatilities on Ab Value and Optimum Small-mid 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 Ab Value with a short position of Optimum Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and Optimum Small-mid.

Diversification Opportunities for Ab Value and Optimum Small-mid

0.95

Correlation Coefficient

Ab Value  Optimum Small-mid

Almost no diversification

The 3 months correlation between ABVCX and Optimum is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid and Ab Value 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 Ab Value Fund are associated (or correlated) with Optimum Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of Ab Value i.e., Ab Value and Optimum Small-mid go up and down completely randomly.

Pair Corralation between Ab Value and Optimum Small-mid

Assuming the 90 days horizon Ab Value is expected to generate 1.45 times less return on investment than Optimum Small-mid. But when comparing it to its historical volatility, Ab Value Fund is 1.72 times less risky than Optimum Small-mid. It trades about 0.25 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,078  in Optimum Small Mid Cap on May 28, 2025 and sell it today you would earn a total of  146.00  from holding Optimum Small Mid Cap or generate 13.54% return on investment over 90 days.

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

Ab Value Fund  vs.  Optimum Small Mid Cap

Ab Value Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Value Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ab Value may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Optimum Small Mid

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Optimum Small Mid Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Optimum Small-mid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ab Value and Optimum Small-mid

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

The idea behind Ab Value Fund and Optimum Small Mid Cap 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.