Correlation Between Ab Global and Absolute Capital

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

By analyzing existing cross correlation between Ab Global E and Absolute Capital Defender, you can compare the effects of market volatilities on Ab Global and Absolute Capital 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 Global with a short position of Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Absolute Capital.

Diversification Opportunities for Ab Global and Absolute Capital

0.97

Correlation Coefficient

Ab Global  Absolute Capital

Almost no diversification

The 3 months correlation between GCECX and Absolute is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E and Absolute Capital Defender in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Defender and Ab Global 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 Global E are associated (or correlated) with Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Defender has no effect on the direction of Ab Global i.e., Ab Global and Absolute Capital go up and down completely randomly.

Pair Corralation between Ab Global and Absolute Capital

Assuming the 90 days horizon Ab Global is expected to generate 1.07 times less return on investment than Absolute Capital. In addition to that, Ab Global is 1.45 times more volatile than Absolute Capital Defender. It trades about 0.1 of its total potential returns per unit of risk. Absolute Capital Defender is currently generating about 0.16 per unit of volatility. If you would invest  1,115  in Absolute Capital Defender on May 11, 2025 and sell it today you would earn a total of  50.00  from holding Absolute Capital Defender or generate 4.48% return on investment over 90 days.

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

Ab Global E  vs.  Absolute Capital Defender

Ab Global E

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global E are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Absolute Capital Defender

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Capital Defender are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Absolute Capital 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 Global and Absolute Capital

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

The idea behind Ab Global E and Absolute Capital Defender 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..