Correlation Between Ab International and Energy Basic

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

By analyzing existing cross correlation between Ab International Growth and Energy Basic Materials, you can compare the effects of market volatilities on Ab International and Energy Basic 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 International with a short position of Energy Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab International and Energy Basic.

Diversification Opportunities for Ab International and Energy Basic

0.63

Correlation Coefficient

Ab International  Energy Basic

Poor diversification

The 3 months correlation between AWPYX and Energy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ab International Growth and Energy Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Basic Materials and Ab International 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 International Growth are associated (or correlated) with Energy Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Basic Materials has no effect on the direction of Ab International i.e., Ab International and Energy Basic go up and down completely randomly.

Pair Corralation between Ab International and Energy Basic

Assuming the 90 days horizon Ab International is expected to generate 1.31 times less return on investment than Energy Basic. But when comparing it to its historical volatility, Ab International Growth is 1.35 times less risky than Energy Basic. It trades about 0.07 of its potential returns per unit of risk. Energy Basic Materials is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,267  in Energy Basic Materials on May 19, 2025 and sell it today you would earn a total of  47.00  from holding Energy Basic Materials or generate 3.71% return on investment over 90 days.

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

Ab International Growth  vs.  Energy Basic Materials

Ab International Growth

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Ab International Growth are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Energy Basic Materials

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Basic Materials are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Energy Basic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab International and Energy Basic

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

The idea behind Ab International Growth and Energy Basic Materials 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.