Correlation Between Abbott Laboratories and Brain Scientific

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

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

Diversification Opportunities for Abbott Laboratories and Brain Scientific

0.0

Correlation Coefficient

Abbott Laboratories  Brain Scientific

Pay attention - limited upside

The 3 months correlation between Abbott and Brain is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Brain Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brain Scientific and Abbott Laboratories 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 Abbott Laboratories are associated (or correlated) with Brain Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brain Scientific has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Brain Scientific go up and down completely randomly.

Pair Corralation between Abbott Laboratories and Brain Scientific

If you would invest  75.00  in Brain Scientific on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Brain Scientific or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Abbott Laboratories  vs.  Brain Scientific

Abbott Laboratories

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Abbott Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Abbott Laboratories is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Brain Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brain Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Brain Scientific is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Abbott Laboratories and Brain Scientific

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

The idea behind Abbott Laboratories and Brain Scientific 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.