Correlation Between ABL Bio and AnterogenCoLtd

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

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

Diversification Opportunities for ABL Bio and AnterogenCoLtd

0.42

Correlation Coefficient

ABL Bio  AnterogenCoLtd

Very weak diversification

The 3 months correlation between ABL and AnterogenCoLtd is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ABL Bio and AnterogenCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AnterogenCoLtd and ABL Bio 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 ABL Bio are associated (or correlated) with AnterogenCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AnterogenCoLtd has no effect on the direction of ABL Bio i.e., ABL Bio and AnterogenCoLtd go up and down completely randomly.

Pair Corralation between ABL Bio and AnterogenCoLtd

Assuming the 90 days trading horizon ABL Bio is expected to under-perform the AnterogenCoLtd. In addition to that, ABL Bio is 2.12 times more volatile than AnterogenCoLtd. It trades about -0.05 of its total potential returns per unit of risk. AnterogenCoLtd is currently generating about 0.03 per unit of volatility. If you would invest  1,513,000  in AnterogenCoLtd on August 31, 2024 and sell it today you would earn a total of  44,000  from holding AnterogenCoLtd or generate 2.91% return on investment over 90 days.

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

ABL Bio  vs.  AnterogenCoLtd

ABL Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABL Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

AnterogenCoLtd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AnterogenCoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AnterogenCoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ABL Bio and AnterogenCoLtd

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

The idea behind ABL Bio and AnterogenCoLtd 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.