Correlation Between AB Science and Virbac SA

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

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

Diversification Opportunities for AB Science and Virbac SA

0.84

Correlation Coefficient

AB Science  Virbac SA

Very poor diversification

The 3 months correlation between AB Science and Virbac is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AB Science SA and Virbac SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virbac SA and AB Science 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 AB Science SA are associated (or correlated) with Virbac SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virbac SA has no effect on the direction of AB Science i.e., AB Science and Virbac SA go up and down completely randomly.

Pair Corralation between AB Science and Virbac SA

Assuming the 90 days horizon AB Science SA is expected to generate 1.42 times more return on investment than Virbac SA. However, AB Science is 1.42 times more volatile than Virbac SA. It trades about -0.05 of its potential returns per unit of risk. Virbac SA is currently generating about -0.14 per unit of risk. If you would invest  103.00  in AB Science SA on September 14, 2024 and sell it today you would lose (12.00) from holding AB Science SA or give up 11.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

AB Science SA  vs.  Virbac SA

AB Science SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AB Science SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Virbac SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virbac SA 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AB Science and Virbac SA

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

The idea behind AB Science SA and Virbac SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.