Correlation Between Tether and ABBC

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

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

Diversification Opportunities for Tether and ABBC

0.0

Correlation Coefficient

Tether  ABBC

Pay attention - limited upside

The 3 months correlation between Tether and ABBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tether and ABBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABBC and Tether 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 Tether are associated (or correlated) with ABBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABBC has no effect on the direction of Tether i.e., Tether and ABBC go up and down completely randomly.

Pair Corralation between Tether and ABBC

If you would invest  0.36  in ABBC on January 3, 2025 and sell it today you would earn a total of  0.07  from holding ABBC or generate 19.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tether  vs.  ABBC

Tether

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tether has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Tether is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ABBC

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABBC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady fundamental indicators, ABBC may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Tether and ABBC

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

The idea behind Tether and ABBC 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.