Correlation Between Swift Foods and First Abacus

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

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

Diversification Opportunities for Swift Foods and First Abacus

-0.33

Correlation Coefficient

Swift Foods  First Abacus

Very good diversification

The 3 months correlation between Swift and First is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Swift Foods and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial and Swift Foods 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 Swift Foods are associated (or correlated) with First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Swift Foods i.e., Swift Foods and First Abacus go up and down completely randomly.

Pair Corralation between Swift Foods and First Abacus

Assuming the 90 days trading horizon Swift Foods is expected to generate 1.48 times more return on investment than First Abacus. However, Swift Foods is 1.48 times more volatile than First Abacus Financial. It trades about 0.05 of its potential returns per unit of risk. First Abacus Financial is currently generating about 0.01 per unit of risk. If you would invest  4.90  in Swift Foods on April 22, 2025 and sell it today you would earn a total of  0.10  from holding Swift Foods or generate 2.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	35.9%
Values	Daily Returns

Swift Foods  vs.  First Abacus Financial

Swift Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Swift Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Swift Foods exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Abacus Financial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Swift Foods and First Abacus

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

The idea behind Swift Foods and First Abacus Financial 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.