Correlation Between Ab Large and Ab Value

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

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

Diversification Opportunities for Ab Large and Ab Value

0.96

Correlation Coefficient

Ab Large  Ab Value

Almost no diversification

The 3 months correlation between APGCX and ABVCX is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Ab Large Cap and Ab Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Value Fund and Ab Large 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 Large Cap are associated (or correlated) with Ab Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Value Fund has no effect on the direction of Ab Large i.e., Ab Large and Ab Value go up and down completely randomly.

Pair Corralation between Ab Large and Ab Value

Assuming the 90 days horizon Ab Large Cap is expected to generate 1.25 times more return on investment than Ab Value. However, Ab Large is 1.25 times more volatile than Ab Value Fund. It trades about 0.3 of its potential returns per unit of risk. Ab Value Fund is currently generating about 0.25 per unit of risk. If you would invest  5,488  in Ab Large Cap on April 29, 2025 and sell it today you would earn a total of  927.00  from holding Ab Large Cap or generate 16.89% return on investment over 90 days.

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

Ab Large Cap  vs.  Ab Value Fund

Ab Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Large Cap are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ab Large showed solid returns over the last few months and may actually be approaching a breakup point.

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 August 2025.

Pair Trading with Ab Large and Ab Value

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

The idea behind Ab Large Cap and Ab Value Fund 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.