Correlation Between Decentraland and ABL

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

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

Diversification Opportunities for Decentraland and ABL

0.0

Correlation Coefficient

Decentraland  ABL

Pay attention - limited upside

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

Pair Corralation between Decentraland and ABL

If you would invest  1.28  in ABL on January 29, 2024 and sell it today you would earn a total of  0.00  from holding ABL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Decentraland  vs.  ABL

Decentraland

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Decentraland are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Decentraland may actually be approaching a critical reversion point that can send shares even higher in May 2024.

ABL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Decentraland and ABL

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

The idea behind Decentraland and ABL 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.