Correlation Between AbL Diagnostics and Compagnie

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Can any of the company-specific risk be diversified away by investing in both AbL Diagnostics and Compagnie 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 Diagnostics and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AbL Diagnostics SA and Compagnie du Cambodge, you can compare the effects of market volatilities on AbL Diagnostics and Compagnie 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 Diagnostics with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of AbL Diagnostics and Compagnie.

Diversification Opportunities for AbL Diagnostics and Compagnie

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between AbL and Compagnie is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding AbL Diagnostics SA and Compagnie du Cambodge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie du Cambodge and AbL Diagnostics 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 Diagnostics SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie du Cambodge has no effect on the direction of AbL Diagnostics i.e., AbL Diagnostics and Compagnie go up and down completely randomly.

Pair Corralation between AbL Diagnostics and Compagnie

Assuming the 90 days trading horizon AbL Diagnostics SA is expected to under-perform the Compagnie. But the stock apears to be less risky and, when comparing its historical volatility, AbL Diagnostics SA is 153.27 times less risky than Compagnie. The stock trades about -0.2 of its potential returns per unit of risk. The Compagnie du Cambodge is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  950,000  in Compagnie du Cambodge on September 29, 2024 and sell it today you would lose (938,550) from holding Compagnie du Cambodge or give up 98.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.41%
ValuesDaily Returns

AbL Diagnostics SA  vs.  Compagnie du Cambodge

 Performance 
       Timeline  
AbL Diagnostics SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AbL Diagnostics 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.
Compagnie du Cambodge 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

AbL Diagnostics and Compagnie Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AbL Diagnostics and Compagnie

The main advantage of trading using opposite AbL Diagnostics and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AbL Diagnostics position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.
The idea behind AbL Diagnostics SA and Compagnie du Cambodge 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.

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