Correlation Between Aberforth Smaller and Ceiba Investments

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

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

Diversification Opportunities for Aberforth Smaller and Ceiba Investments

-0.73

Correlation Coefficient

Aberforth Smaller  Ceiba Investments

Pay attention - limited upside

The 3 months correlation between Aberforth and Ceiba is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aberforth Smaller Companies and Ceiba Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceiba Investments and Aberforth Smaller 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 Aberforth Smaller Companies are associated (or correlated) with Ceiba Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceiba Investments has no effect on the direction of Aberforth Smaller i.e., Aberforth Smaller and Ceiba Investments go up and down completely randomly.

Pair Corralation between Aberforth Smaller and Ceiba Investments

Assuming the 90 days trading horizon Aberforth Smaller Companies is expected to generate 0.06 times more return on investment than Ceiba Investments. However, Aberforth Smaller Companies is 15.42 times less risky than Ceiba Investments. It trades about 0.28 of its potential returns per unit of risk. Ceiba Investments is currently generating about -0.11 per unit of risk. If you would invest  135,600  in Aberforth Smaller Companies on April 24, 2025 and sell it today you would earn a total of  20,800  from holding Aberforth Smaller Companies or generate 15.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Aberforth Smaller Companies  vs.  Ceiba Investments

Aberforth Smaller

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aberforth Smaller Companies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Aberforth Smaller exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ceiba Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ceiba Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aberforth Smaller and Ceiba Investments

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

The idea behind Aberforth Smaller Companies and Ceiba Investments 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..