Correlation Between ABL Bio and Genexine

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

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

Diversification Opportunities for ABL Bio and Genexine

0.68

Correlation Coefficient

ABL Bio  Genexine

Poor diversification

The 3 months correlation between ABL and Genexine is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ABL Bio and Genexine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genexine 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 Genexine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genexine has no effect on the direction of ABL Bio i.e., ABL Bio and Genexine go up and down completely randomly.

Pair Corralation between ABL Bio and Genexine

Assuming the 90 days trading horizon ABL Bio is expected to under-perform the Genexine. In addition to that, ABL Bio is 1.7 times more volatile than Genexine. It trades about -0.27 of its total potential returns per unit of risk. Genexine is currently generating about -0.4 per unit of volatility. If you would invest  785,000  in Genexine on August 31, 2024 and sell it today you would lose (180,000) from holding Genexine or give up 22.93% of portfolio value over 90 days.

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

ABL Bio  vs.  Genexine

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.

Genexine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genexine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Genexine 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 Genexine

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

The idea behind ABL Bio and Genexine 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..