Correlation Between Ab Discovery and Ab Emerging

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

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

Diversification Opportunities for Ab Discovery and Ab Emerging

0.96

Correlation Coefficient

Ab Discovery  Ab Emerging

Almost no diversification

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

Pair Corralation between Ab Discovery and Ab Emerging

Assuming the 90 days horizon Ab Discovery Growth is expected to generate 1.9 times more return on investment than Ab Emerging. However, Ab Discovery is 1.9 times more volatile than Ab Emerging Markets. It trades about 0.22 of its potential returns per unit of risk. Ab Emerging Markets is currently generating about 0.24 per unit of risk. If you would invest  1,173  in Ab Discovery Growth on May 1, 2025 and sell it today you would earn a total of  180.00  from holding Ab Discovery Growth or generate 15.35% return on investment over 90 days.

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

Ab Discovery Growth  vs.  Ab Emerging Markets

Ab Discovery Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Discovery Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ab Discovery showed solid returns over the last few months and may actually be approaching a breakup point.

Ab Emerging Markets

Risk-Adjusted Performance

Solid

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

Pair Trading with Ab Discovery and Ab Emerging

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

The idea behind Ab Discovery Growth and Ab Emerging Markets 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.